Kate Is the CFO of a Major Firm and Has

question 44

Multiple Choice

Kate is the CFO of a major firm and has the job of assigning discount rates to each project that is under consideration.Kate's method of doing this is to assign an incrementally higher rate as the risk level of the project increases over that of the current firm.Likewise,she assigns lower rates as the risk level declines.Which one of the following approaches is Kate using to assign the discount rates?

• A)subjective approach
• B)straight WACC approach
• C)divisional rating
• D)pure play approach
• E)equity rating

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