In Order to Use a Firm's WACC to Evaluate Its

question 35

Multiple Choice

In order to use a firm's WACC to evaluate its 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 firm.
• B) The systematic risk of the project is the same as the overall systematic risk of the firm.
• C) The project should have conventional cash flows.
• D) Both A and B above

---

Definitions:

Theodore Weld

A prominent leader in the American abolitionist movement during the early and mid-19th century, known for his powerful oratory and anti-slavery publications.

Sin

An act considered to be a transgression against divine law or ethical principles, often associated with religious belief systems.

Colonization Society

Often refers to organizations like the American Colonization Society, founded in the early 19th century to support the migration of free black people to Africa.