Firms that have many divisions with different lines of business should still use a companywide WACC to evaluate projects.

Name: Firms that have many divisions with different lines of business should still use a companywide WACC to evaluate projects.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Different divisions may have different risk profiles, leading to different costs of capital. Using a companywide WACC might misrepresent the true risk and return of projects in various divisions.

Firms That Have Many Divisions with Different Lines of Business