Express Press Evaluates Many Different Capital Budgeting Projects Each Year

question 5

Multiple Choice

Express Press evaluates many different capital budgeting projects each year.The risks of the projects often differ significantly,from very little risk to risks that are substantially greater than the average risk associated with the firm.If Express Press always uses its weighted average cost of capital,or average required rate of return,to evaluate all of these capital budgeting projects,then the company might make an incorrect decision,or a mistake,by

• A) accepting projects that actually should be rejected.
• B) accepting projects with internal rates of return that are too high.
• C) rejecting projects that actually should be rejected.
• D) rejecting projects with internal rates of return that are lower than the appropriate risk-adjusted required rate of return.
• E) accepting project that actually should be accepted.

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Definitions:

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A body of law that deals with behavior that is considered harmful to society as a whole, providing the processes for punishing those who commit such offenses.

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The ethical principle or legal right that a physician or other professional will hold secret all information relating to a client unless the client gives consent permitting disclosure.

Jeremy Bentham

An English philosopher and jurist, considered the founder of modern utilitarianism, advocating that actions are right if they are useful or for the benefit of a majority.