A Firm Should Never Accept a Project If Its Acceptance

question 107

True/False

A firm should never accept a project if its acceptance would lead to an increase in the firm's cost of capital (its WACC).

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Definitions:

External Incentive

A motivator or reward from the outside environment that encourages specific behaviors or actions.

Reducing Dissonance

Involves minimizing or eliminating cognitive dissonance, which is the discomfort experienced when holding two or more conflicting cognitions (thoughts, beliefs, or attitudes).

Chosen School

A term that may refer to an educational institution selected specifically for attendance, based on various criteria such as academic, religious, or personal preferences. If not used in a specific context, the term might not have a recognized definition.

Ignoring New Information

The act of disregarding or dismissing new evidence or data that contradicts one's existing beliefs or theories.