If a Typical Company Uses the Same Cost of Capital

question 42

Multiple Choice

If a typical company uses the same cost of capital to evaluate all projects, what will happen?

• A) The firm will likely become riskier over time, but its intrinsic value will be maximized.
• B) The firm will likely become riskier over time, and its intrinsic value will not be maximized.
• C) The firm will likely become less risky over time, and its intrinsic value will not be maximized.
• D) The firm will likely become less risky over time, and its intrinsic value will be maximized.