In Order to Use the WACC to Evaluate a Future

question 38

Multiple Choice

In order to use the WACC to evaluate a future project's flows, which of the following must hold?

• A) The project will be financed with the same proportion of debt and equity as the company.
• B) The systematic risk of the project is the same as the overall systematic risk of the company.
• C) The project must be viable.
• D) a and b above.