Why It Is Necessary to Make Sure a Project Is

Why it is necessary to make sure a project is in the same risk class as existing operations before using the WACC as the discount rate?

A) If a project has high risk, then it should be rejected.
B) A firm that uses its WACC to evaluate projects without regarding the risk class of the project will tend to become riskier over time.
C) Only projects with similar risk can result in positive NPVs.
D) If a project is in a different risk class then a different tax rate must be used.
E) The risk class of a proposed project is important only if it affects the firm's bond ratings.