To avoid the awkward process of transferring the cost of capital going from the parent to the subsidiary,it is advisable to use the _______ rate.

Question

Quizplus · Accepted Answer

The all-equity discount rate is advisable to use to avoid the awkward process of transferring the cost of capital from the parent to the subsidiary, as it simplifies the calculation by assuming the project is financed entirely with equity, avoiding the complexities of different financing structures.

To Avoid the Awkward Process of Transferring the Cost of Capital