Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Which of the following independent projects should Tapley accept, assuming that the company uses the NPV method when choosing projects?
Answer is either:
a) Project A, which has average risk and an IRR = 9%.
b) Project B, which has below-average risk and an IRR = 8.5%.
c) Project C, which has above-average risk and an IRR = 11%.
d) Without information about the projects' NPVs we cannot determine which project(s) should be accepted.
e) All of these projects should be accepted.