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WACC

The general rule for using the weighted average cost of capital in capital budgeting decisions is accept all projects with rates of return greater or equal to the WACC, less than the WACC, equal to or less than the WACC or positive rates of return

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The WACC is the rate used for discounting the cash flows for the purpose of calculating the NPV. Projects are accepted if the NPV is >=0 and rejected if NPV is less than zero.
If the discounting rate increases, NPV will decrease since the PV of the cash flows will be lower.
The rate of return is the rate at which the NPV ...

Solution Summary

The solution explains the decision rule for accepting/rejecting projects based on WACC

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