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Author Question: If a firm applies its overall cost of capital to all its proposed projects, then the divisions ... (Read 23 times)

darbym82

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on: Apr 25, 2021

Question 1

For a firm with multiple business units, the cost of capital developed for each unit is called a
◦ divisional cost of capital.
◦ pure play approach.
◦ subjective risk adjustment.
◦ stratified beta coefficient.
◦ fundamental beta coefficient.

Question 2

If a firm applies its overall cost of capital to all its proposed projects, then the divisions within the firm will tend to
◦ receive more funding if they represent the riskiest operations of the firm.
◦ avoid risky projects so that they will receive more funding.
◦ become less risky over time based on the projects that are accepted.
◦ have equal probabilities of receiving funding for their projects.
◦ propose less risky projects than if separate discount rates were applied to each project.
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by darbym82 on Apr 25, 2021

shewald78

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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darbym82

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Reply 2 on: Apr 25, 2021
Great answer, keep it coming :)

zacnyjessica

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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