1. You have been asked to make a short presentation at your company’s annual capital budget meeting to present an analysis of the strengths and weaknesses of the following capital budgeting selection methodologies: NPV, payback, IRR. Describe how you would respond to this request at the meeting.
2. The senior executives were impressed with your presentation on capital budgeting methodologies. They have asked you to present a follow-up discussion regarding the company’s weighted average cost of capital (WACC). Specifically, they want to know how it is calculated and, most importantly, how it should be used. Discuss your responses.