Resources division proposes mining project

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Assume that Wesfarmers has a WACC of 17% p.a. The annual meeting is being held to decide capital expenditure for the following year. • Head of the resources division proposes a mining project with expected return of 24% • Head of the retail division proposes a project opening a new Coles store in growth region with expected return of 12% Is the following statement true or false? “As the companywide WACC is 17%, the CEO should choose the mining project that will generate a higher return than the benchmark return.”

Reference no: EM131325035

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