The use of the same cost of capital (risk adjusted discount rate)for all capital projects in a corporation
A)is usually the correct procedure.
B)is incorrect since different divisions of the corporation may be faced with different levels of risk.
C)is incorrect since different capital projects,even in the same division,may be faced with different levels of risk.
D)Both B and C

Question

Quizplus · Accepted Answer

Different divisions or projects within a corporation may have different levels of risk, and using the same cost of capital for all projects may not accurately reflect the riskiness of each project. It is important to adjust the discount rate based on the specific risks and uncertainties associated with each individual project or division.

The Use of the Same Cost of Capital (Risk Adjusted