The Use of WACC to Select Investments Is Theoretically Acceptable

question 62

Multiple Choice

The use of WACC to select investments is theoretically acceptable when:

• A) the correlation of all new projects are equal.
• B) the NPV is positive when discounted by the WACC.
• C) the systematic risk of the projects are equal to the systematic risk of the firm.
• D) the firm is well diversified and the unsystematic risk is negligible.

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Definitions:

Species

A group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding, classified together as having common characteristics.

Reproductively Isolated

A state in which different groups of organisms can no longer interbreed and produce fertile offspring, leading to speciation.

Fertile Offspring

Offspring that are capable of reproducing, indicating successful genetic combination and viability.

Species

A fundamental category in biological taxonomy, defined as a group of organisms capable of interbreeding and producing fertile offspring.