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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