As a recent MBA graduate, you are involved in the project analysis of your company that has three divisions in different business sectors. Your company’s current practice for project analysis is to apply its weighted average cost of capital (WACC) of 12% as a single hurdle rate to all projects across all three divisions.
(a) Criticize your company’s current practice of project evaluation; (b) Discuss the long-term consequences of following this practice including with respect to the riskiness of projects to be accepted and rejected; and (c) What alternative practical criteria would you suggest to your boss for project evaluation?
Please post your initial response by 23:59 EST Day 3 of the Week, and comments on the posts of at least two classmates by 23:59 EST Due Date.
You must first post your own response directly to the Discussion Topics by Day 3 before accessing other students’ responses. In addition, you should post at least TWO thoughtful and substantive responses to other classmates’ answers/comments by the due date in order to earn 5 points for each Discussion Topic. A mere “Yes, I agree” or “No, I don’t agree” type of responses will not be given any credit.
Additional bonus credit may be given to substantive responses reflecting additional research with sources of information clearly identified as they are particularly valued and enrich our online learning.
Concluding comments on each Discussion Topic will be posted on the Discussion folder after due date.