The capital structure of Wild West Inc. is as follows:
Show your calculation
a. Calculate the WACC for Wild West Inc.
b. Should Wild West Inc. accept an IRR of 7% new project which is of similar risk as all the existing projects of the Big Plan? Why and why not?
c. Should Wild West Inc. accept an IRR of 12% new project which is considered 30% higher in risk as compared with all the existing projects of the Big Plan? Why and why not?