Use the WACC you calculated to compute the payback, NPV, IRR, and MIRR of two Capital Budgeting Projects, then explain which projects should be accepted.

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The Weighted Average Cost of Capital (WACC) can be used to calculate the payback, net present value (NPV), internal rate of return (IRR) and modified internal rate of return (MIRR) for two capital budgeting projects in order to determine which one should be accepted. The WACC is a measure of the required return on investments taken by a company, so it serves as an ideal benchmark against which to compare potential projects.

For example, if two projects have payback periods of 4 years and 5 years respectively then the one with the shortest amount of time may be more attractive since it has less risk associated with it. Similarly, if both have NPVs that are positive but one has a higher value then this could also suggest greater returns over time and thus make it more desirable.

Lastly, if both have IRRs above their WACCs then they may both provide sufficient returns on investment – however, some companies choose to use MIRRs which take into account timing differences between cash flows when making decisions about which project should be accepted. Ultimately though whichever option yields the highest profitability while still being within the company’s acceptable level of risk should ultimately be chosen as its primary choice for future investments.