A fiRm That Uses Its WACC as a Cutoff Without

question 104

True/False

A firm that uses its WACC as a cutoff without considering project risk tends to accept negative NPV
projects over time.

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Definitions:

Real World

A term referring to the tangible, everyday reality in which human beings live and interact, as opposed to theoretical constructs or fictional worlds.

Consequentialism

An ethical theory that judges the rightness or wrongness of an action based on the outcomes or consequences it produces.

Calculations

The process of computing by mathematical operations.

Utilitarian Theory

An ethical theory suggesting that the best action is the one that maximizes utility, typically defined as that which produces the greatest well-being of the greatest number of people.