Northwest Territories Holding Corporation is comprised of two different divisions: car rental and furniture manufacturing.Two-thirds of the company's business comes from the furniture manufacturing division and the balance from the car rental division.The WACC for the car rental division is 9% and for the furniture manufacturing division is 15%.What would happen if the company used the overall WACC in the valuation of the following independent projects?
A) Incorrectly accept project II and incorrectly reject project I.
B) Incorrectly accept projects II and IV.
C) Incorrectly reject projects I and III.
D) Incorrectly reject project III and incorrectly accept IV.
Correct Answer:
Verified
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