The Use of WACC as the Discount Rate When Evaluating

question 9

Multiple Choice

The use of WACC as the discount rate when evaluating a project is acceptable when the:

• A)firm is well established and financially stable.
• B)WACC produces a positive NPV.
• C)risk of the project is equal to the risk of the firm.
• D)firm is well diversified and the unsystematic risk is negligible.
• E)project has only systematic risk.

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