Suppose Tapley Inc. uses a WACC of 8% for below-average risk…
Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Project A has average risk and an IRR of 9%. Project B has below-average risk and an IRR of 8.5%. Project C has above-average risk and an IRR of 11%. Which of the above independent projects should Tapley accept, assuming that the company uses the IRR method when choosing projects? Why?
