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Four new text publishing products

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On-line Text Co. has four new text publishing products that it must decide on publishing to expand its services. The firm's WACC has been 17%. The projects are of equal risk, ßs of 1.6. The risk-free rate is 7% and the market rate is expected to be 12%. The projects are expected to earn as follows:

i. Project W: 14%

ii. Project X: 18%

iii. Project Y: 17%

iv. Project Z: 15%

Required:

a. Justify which projects should be selected and give reason.

b. Does current WACC rate of 17% is irrelevant or relevant? Justify your answer.

Reference no: EM132580193

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