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whitywhite11 whitywhite11
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2 months ago
Fussy Inc. is composed of two different divisions: food catering and shoe making. The company's overall WACC is 10%, while the WACC for the food catering division is 9% and for the shoe making division is 12%. What would happen if the company used the overall WACC in the valuation of the following independent projects?

ProjectIndustryCF0Annual CFProject Life
IFood catering$400,000$125,0004 years
IIShoe making$600,000$150,0006 years
IIIShoe making$500,000$135,0005 years
IVFood catering$800,000$170,0006 years


▸ Incorrectly accept project III and incorrectly reject project IV.

▸ Incorrectly accept projects II and III.

▸ Incorrectly reject projects I and IV.

▸ Incorrectly reject project I and incorrectly accept project III.
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
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michaelfidanzamichaelfidanza
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2 months ago
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whitywhite11 Author
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2 months ago
Smart ... Thanks!
bahajo
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This site is awesome
mikeh209
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2 hours ago
Thank you, thank you, thank you!
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