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David Ding is evaluating two conventional, independent capital budgeting projects (X and Y)

 

by making use of the risk-adjusted discount rate (RADR) method of analysis.Projects X and Y have internal rates of return of16 percent and12 percent, respectively. The RADR appropriate to Project X is18 percent, while Project Y's RADR is only10 percent. The company's overall, weighted-average cost of capital is14 percent. David should:

 

accept Project X and accept Project Y.

 

accept Project X and reject Project Y.

 

reject Project X and accept Project Y.

 

reject Project X and reject Project Y.

Accounting Audit Management Project Management
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Question added by Emad Mohammed said abdalla , ERP & IT Software, operation general manager . , AL DOHA Company
Date Posted: 2015/04/05
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Deleted user
by Deleted user

Agree with choice of the experts

 

Emad Mohammed said abdalla
by Emad Mohammed said abdalla , ERP & IT Software, operation general manager . , AL DOHA Company

>>>>>>> reject Project X and accept Project Y.

 

Mohammed Shahid Ullah
by Mohammed Shahid Ullah , Executive Director (Finance) , Coal Power Generation Company Bangladesh Limited

In case of Project X, Weighted cost of capital is less then the IRR, So, Company accept the  Project X and reject Project Y.

 

Wasi Rahman Sheikh
by Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG

My answer option3) ????????????????

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