contestada

if a company uses its WACC as the discount rate for all of the projects it undertakes then the firm will tend to :1.) reject some positive net present value projects.2.) accept some negative net present value projects.3.) favor high-risk projects over low-risk projects.4.) increase its overall level of risk over time.A.) 1 and 2 only.B.) 3 and 4 only.C.) 1,2, and 3 only.D.) 1,2,3, and 4 only.Give an answer with a reason.

Respuesta :

Parrain

When a company uses WACC as the discount rate on every single one of its projects then the firm will tend to 1.) reject some positive net present value projects and 2.) accept some negative net present value projects. so A.) 1 and 2 only.

What is the WACC ?

The return that investors and lenders anticipate receiving in exchange for their capital investments in a company is shown by the weighted average cost of capital (WACC).

Because it is less likely that a company with a high WACC will generate a greater rate of return on its capital, it is less alluring to investors. Because it is more probable that it will get a better rate of return on its investments, a company with a low WACC is more desirable.

This is why a company would reject positive net present value project sometimes, and accept negative present value projects, all to minimize risk.

Find out more on the WACC a https://brainly.com/question/13932483

#SPJ1

Otras preguntas