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Firms cost of capital can ever create value

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.

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Finance Basics: Firms cost of capital can ever create value

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Firms cost of capital can ever create value

Reference No:- TGS01451630

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Creating an investment position

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Firms cost of capital can ever create value

Reference No:- TGS01451630

Recent Questions Asked Finance Basics

Q : Creating an investment position

Q : What is the expected value of the gamble

Q : Create an excel spreadsheet detailing the cost

Q : Primary responsibilities of a corporate financial staff

Q : Firms cost of capital can ever create value

Q : Calculate the firms levels of earnings

Q : Estimated the index model for et incorporated

Q : What is the breakpoint on the mcc

Q : What is the payment for the first year

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