Andrew Pederson

While WACC is frequently used as the base discount rate for corporate-level decision-making, using it as a universal discount rate for projects can result in inaccurate project valuations. Incorporating the opportunity cost of capital provides a more nuanced and accurate approach to project evaluation.

Which criterion do you rely on to make mutually exclusive decisions: Net Present Value or Rate of Return? When NPV and ROR are not in agreement, you must develop a proper incremental analysis to make the best economic choice.