Which of the Following Statements Is True

question 97

Multiple Choice

Which of the following statements is true?

• A) If the new project is riskier than the firm's existing projects, then it should be charged a higher cost of capital.
• B) If the new project is riskier than the firm's existing projects, then it should be charged a lower cost of capital.
• C) If the new project is riskier than the firm's existing projects, then it should be charged the firm's cost of capital.
• D) The new project's risk is not a factor in determining its cost of capital.

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Definitions:

Duties

Obligations required by law, morality, or roles, entailing actions that an individual is expected or required to carry out.

Conflicts

Situations in which interests, ideas, or values of different individuals or groups are incompatible, leading to a potential dispute or struggle.

Financial Statements

Written records that convey the business activities and financial performance of a company, including the balance sheet, income statement, and cash flow statement.

Business Firm

An organization engaged in commercial, industrial, or professional activities, aiming to generate profits.