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A firm with a cost of capital of 7% is considering two projects (they are not mutually exclusive), one expected to return 9% and a second expected to return 9.5%. Which projects should it pursue

Respuesta :

Zviko

Answer:

pursue both projects

Explanation:

The projects are not mutually exclusive thus the choice of one project does not hold back the pursuant of another (can occur at the same time).

Projects which provide a return above their cost of capital must be pursued as they are less risky.

Both projects provide the return above the costs of capital and should be pursued.