TRUE OR FALSE AND EXPLAIN
3. The delayed investment problem that sometimes plagues IRR is linked to the fact that sometimes a project doesn’t have an IRR. To address this problem, the incremental rate of return is often calculated instead.
4. Companies might be tempted to use WACC if they find it difficult to estimate the required return for a new project, but they need to be cautious in doing so as WACC might not be an appropriate discount rate.