Question

The opportunity cost of capital, used to calculate the base-case for adjusted present value analyses, can be thought of as Multiple Choice the promised yield rather than the expected yield of an investment. the WACC of an all-equity financed version of the firm. the return on the opportunities exploited by a firm's competitors. the rate corresponding to an average debt level among firms in the industry.

Answer 1

the WACC of an all-equity financed version of the firm.

Step-by-step explanation:

WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)

for a project to be accepted, the internal rate of return should be higher than the WACC