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Why would a firm not use its weighted average cost of capital (WACC) to evaluate all...

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Finance

Why would a firm not use its weighted average cost of capital(WACC) to evaluate all proposed investments? (5m)

Hints and notes to students: dot points are acceptable.It is important to explain your answers with details or demonstrateyour understanding by applying examples. Full marks willnot be awarded to identical (100% similarity)answers from the required textbook.  

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A firm may not use its WACC to evaluate all of its proposed investments because the WACC is always a representation of the firms required rate of return whereas the proposed investment at times    See Answer
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Why would a firm not use its weighted average cost of capital(WACC) to evaluate all proposed investments? (5m)Hints and notes to students: dot points are acceptable.It is important to explain your answers with details or demonstrateyour understanding by applying examples. Full marks willnot be awarded to identical (100% similarity)answers from the required textbook.  

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