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flows are $30,000. At a WACC of 10%, the two projects have identical
NPVs. Which project's NPV is more sensitive to changes in the
WACC?
• Question 17
The WACC for two mutually exclusive projects that are being
considered is 12%. Project K has an IRR of 20% while Project R's IRR
is 15%. The projects have the same NPV at the 12% current WACC.
Interest rates are currently high. However, you believe that money costs
and thus your WACC will soon decline. You also think that the projects
will not be funded until the WACC has decreased, and their cash flows
will not be affected by the change in economic conditions. Under these
conditions, which of the following statements is CORRECT?
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FIN 534 Final Exam Set 2 (4 Sets)
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FIN 534 Final Exam Part 2 Set 1