For the purpose of this assignment, a project is defined as any endeavor that had a capital outlay. Pick a project you have recently completed or one you would like to complete in the near future. This could be a project in your home, place of work, or even church or other organization with which you are familiar. Respond to the prompts below.
- Introduce your project with a reflection on the importance of selecting the right projects in which to invest capital. Do we always select those projects that have the highest return on investment (ROI)?
- Describe the relationship between risk and return and how you would measure for both in your project. What other factors play into capital budgeting decisions?
- Explain how you would calculate the weighted average cost of capital (WACC) and its components for your project.