National Petroleum Refiners Corporation (NPR) has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division L is considering a project with an expected return of 9.5%.Should National Petroleum Refiners Corporation (NPR) accept or reject the project?
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National Petroleum Refiners Corporation (NPR) has two divisions, L and H. Division L is the company’...
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