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weighted average cost of capital and IRR investments

Your company's weighted average cost of capital is 11%. You believe the company should make a particular investment, but the IRR of this investment is only 9%.

What arguments might exist in support of your position?

Is it really possible that making an investment with a return below your firm's cost of capital can ever create value?

Explain.

Solution Preview

As discussed in the previous response, the IRR is the discount rate that makes the NPV of an investment zero. An investment ...

Solution Summary

The solution discusses if a company should make a particular investment with an IRR of the investment only being 9%.

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