Question

A firm is considering expanding its current operations and has estimated the internal rate of return on that expansion to be 12.2%. The firm's WACC is 11.8%. Given this, you know that the: the project will have a lower debt-equity ratio than the firm's current operations. the appropriate discount rate for the project is between 11.8% and 12.2%. the project has slightly more risk than the firm's current operations. the expansion should be undertaken as it has a positive net present value.

Answer 1

Answer:

expansion should be undertaken as it has a positive net present value