A company is considering investing in a new project. All investment will come from debt (10% rate, for example).
Is it right to discount the project cash flows at a 10% rate or should I calculate company's new WACC considering this new debt and discount the project at WACC?
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You would discount the new project at 10% to find the NPV of the project. If you were going to calculate the NPV of the entire cash flows to the business (this project combined with others) then you would have to recalculate WACC with the new debt taken under consideration.
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