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What rate should they use when evaluating the new project

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Reference no: EM132966053

Question - A firm has two divisions and an overall WACC of 10%. Risky Division has a WACC of 16%. Safe Division has a WACC of 6%. Safe Division has a new project that is similar to their usual projects. What rate should they use when evaluating the new project?

6% since the project is within the Safe Division

16% since the Safe Division wants to be very cautious.

10% since this is the firm's WACC.

Reference no: EM132966053

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