The company cost of capital may be an inappropriate discount rate for a capital budgeting proposal if: A) it calculates a negative NPV for the proposal. B) the proposal has a different degree of risk. C) the company has unique risk. D) the company expects to earn more than the risk-free rate.
The company cost of capital may be an inappropriate discount rate for a capital budgeting proposal if: A) it calculates a negative NPV for the proposal. B) the proposal has a different degree of risk. C) the company has unique risk. D) the company expects to earn more than the risk-free rate.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 1QTD
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16. The company cost of capital may be an inappropriate discount rate for a capital budgeting proposal if:
A) it calculates a negative
B) the proposal has a different degree of risk.
C) the company has unique risk.
D) the company expects to earn more than the risk-free rate.
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