If a Firm Uses the Same Company Cost of Capital

question 73

Multiple Choice

If a firm uses the same company cost of capital for evaluating all projects, which situation(s) will likely occur?

• A)The firm will reject good low-risk projects only.
• B)The firm will reject good low-risk projects and will accept poor high-risk projects.
• C)The firm will reject good low-risk projects, accept poor high-risk projects, and accept poor high-risk projects.
• D)The firm will accept poor high-risk projects only.

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Definitions:

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The act of increasing the amount of taxes levied by a government on businesses and individuals.

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An individual's or group's identification with or support for a particular political party or ideology.

NDP

Stands for New Democratic Party, a social democratic political party in Canada.

Light Smoker

A smoker who consumes a relatively small number of cigarettes or tobacco products compared to the average smoker.