Wacc for high- risk projects

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Reference no: EM131517262

Bergeron Foods is considering the following independent projects for the coming year:

Project Required Investment Expected Rate of Return Risk

X $6 million 14.5 % High

Y 6 million 10.5 % Average

Z 8 million 10.5 % Low

Bergeron's WACC is 12 percent, but it adjusts for risk by adding 2 percent to the WACC for high- risk projects and subtracting 2 percent for low-risk projects. which project should Bergeron accept assuming it faces no capital constraints?

a. project X and Z

b. project y and z

c. project x only

d. project y only

e. project z only

Reference no: EM131517262

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