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Determine the elkridge construction company cost of capital

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Elkridge Construction Company has an average cost of capital of 12 percent. This cost of capital reflects the cost of capital for an Elkridge Construction project with average risk. However, the firm takes on projects of various risk levels. The company's experience suggests that low-risk projects have a cost of capital of 10 percent and high-risk projects have a cost of capital of 15 percent. Which of the following projects should the company reject?

Project Expected Return Risk

1.Single-family homes 13% Low

2.Multifamily residential 12% Average

3.Commercial 18% High

4.Single-family homes 9% Low

5.Commercial 13% High

Reference no: EM132507365

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