If a Firm Uses Its WACC as the Discount Rate

question 80

Multiple Choice

If a firm uses its WACC as the discount rate for all of the projects it undertakes then the firm will tend to:
I.reject some positive net present value projects.
II.accept some negative net present value projects.
III.favor high risk projects over low risk projects.
IV.increase its overall level of risk over time.

• A)I and III only
• B)III and IV only
• C)I, II, and III only
• D)I, II, and IV only
• E)I, II, III, and IV

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Definitions:

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An individual who continues to live after the death of a close one, often facing emotional and psychological challenges.

Domestic Violence

A pattern of behavior in a relationship that is used to gain or maintain power and control over an intimate partner.

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Societal norms dictating the behaviors, attitudes, and actions considered appropriate for people based on their perceived or actual gender.

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