Unformatted text preview: : } Market Conditions Level Of Interest Rates Tax Rates Factors The Firm Can Control : Capital Structure Policy Dividend Policy Investment Policy j. Should the company use the composite WACC as the hurdle rate for each of its projects? Answer: No. The composite WACC reflects the risk of an average project undertaken by the firm. Therefore, the WACC only represents the “hurdle rate” for a typical project with average risk. Different projects have different risks. The project’s WACC should be adjusted to reflect the project’s risk. Mini Case: 10 - 17...
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- Spring '08
- Weighted average cost of capital, Composite WACC