Jenner's is a multi-division firm that uses its overall WACC as the discount rate for all proposed projects. Each division is in a separate line of business and each presents risks unique to those lines. Given this, a division within the firm will tend to:
A) receive less project funding if its line of business is riskier than that of the other divisions.
B) avoid risky projects so it can receive more project funding.
C) become less risky over time based on the projects that are accepted.
D) have an equal probability with all the other divisions of receiving funding.
E) prefer higher risk projects over lower risk projects.
Correct Answer:
Verified
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