In Order to Value a Project Which Is Not Scale

question 7

Multiple Choice

In order to value a project which is not scale enhancing you need to:

• A) typically calculate the equity cost of capital using the risk adjusted beta of another firm before calculating the WACC.
• B) typically increase the beta of another firm in the same line of business and then calculate the discount rate using the SML.
• C) typically you can simply apply your current cost of capital.
• D) discount at the market rate of return since the project will diversify the firm to the market.

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Definitions:

Thoracic Cavity

The chamber of the body of vertebrates that is protected by the thoracic wall and contains the lungs and heart.

Ventral Cavity

A large body cavity that houses many organs, including those in the thoracic and abdominal regions.

Feedback Mechanism

A process in biological and mechanical systems where the system's output is fed back into the system as input, adjusting its performance to meet a desired goal.

Effector

An organ or cell that acts in response to a stimulus, often involved in muscle contraction or gland secretion.