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    Creating Value by investing with a return below firm's WACC

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    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.

    © BrainMass Inc. brainmass.com May 20, 2020, 3:10 pm ad1c9bdddf
    https://brainmass.com/business/weighted-average-cost-of-capital/creating-value-by-investing-with-a-return-below-firm-s-wacc-116943

    Solution Preview

    The company's weighted average cost of capital is the discount rate is to be used for a project whose risk is the same as the average risk of the company's ...

    Solution Summary

    The solution answers the question whether it is possible that making an investment with a return below your firm's cost of capital will ever create value.

    $2.19

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