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An Objective Approach to Calculating Divisional WACCs Would Be Done

Question 15

Multiple Choice

An objective approach to calculating divisional WACCs would be done by


A) simply considering the project's risk relative to the firm's lines of business and adjusting upward or downward to account for subjective opinions of project risk.
B) computing the average beta for the firm, the firm's CAPM formula, and the firm's WACC.
C) computing the average beta per division, using these figures for each division in the CAPM formula, and then constructing divisional WACCs.
D) simply averaging out all the WACCs for all the firm's projects.

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