The use of WACC to select investments is acceptable when the:
A) correlations of all new projects are equal.
B) NPV is positive when discounted by the WACC.
C) risks of the projects are equal to the risk of the firm.
D) firm is well diversified and the unsystematic risk is negligible.
E) None of these.
Correct Answer:
Verified
Q1: For a multi-product firm,if a project's beta
Q2: The problem of using the overall firm's
Q4: The weighted average of the firm's costs
Q5: Beta measures depend highly on the:
A) direction
Q6: Using the CAPM to calculate the cost
Q7: The formula for calculating beta is given
Q8: Companies that have highly cyclical sales will
Q9: The WACC is used to _ the
Q10: When valuing an entire firm with both
Q11: Betas may vary substantially across an industry.
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