The firm is considering an investment opportunity, which has an internal rate of return of 10 percent. The project
A. should not be considered because its internal rate of return is less than the cost of long-term debt.
B. should be considered because its internal rate of return is greater than the cost of debt.
C. should not be considered because its internal rate of return is less than the weighted average cost of capital.
D. should be considered because its internal rate of return is greater than the weighted average cost of capital.
Answer:C
The firm is considering an investment opportunity, which has an internal rate of return of 10 percent. The project
A. should not be considered because its internal rate of return is less than the cost of long-term debt. B. should be considered because its internal rate of return is greater than the cost of debt. C. should not be considered because its internal rate of return is less than the weighted average cost of capital. D. should be considered because its internal rate of return is greater than the weighted average cost of capital.