12. Investment Decisions

Question 1

12. What are to ways to determine the RRR for shareholders (cost of equity)?

Answer 1

Dividend Valuation Models

Capital Asset Pricing Models

Question 2

12. Should an organisation accept a project if it is higher than the WACC?

Answer 2

Accept a project if the IRR exceeds the organisation’s WACC.
Reject a project if the IRR is less than the organisation’s WACC.
The higher the IRR the better