Which of the following is the best reason to use divisional costs of capital rather than try to measure the risk of a specific project or use the firm's overall WACC?
A) Divisions usually have the same level of risk as the overall firm.
B) Divisional costs of capital are usually easy to estimate.
C) Pure play comparison firms are usually easy to find.
D) Many divisions have different risk characteristics.
Correct Answer:
Verified
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