WACC can be used in investment appraisal in all the following circumstances, except: A. Business risk of investment project is similar to business risk of existing operations. B. Incremental finance is raised in proportions that preserve existing capital structure. C. Required return of existing finance sources is not affected by new investment project. D. Use of CAPM will produce a conflicting result

WACC can be used in investment appraisal in all the following circumstances, except: A. Business risk of investment project is similar to business risk of existing operations. B. Incremental finance is raised in proportions that preserve existing capital structure. C. Required return of existing finance sources is not affected by new investment project. D. Use of CAPM will produce a conflicting result

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3MC: The third step for making a capital investment decision is to establish baseline criteria for...

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QUESTION 17

WACC can be used in investment appraisal in all the following circumstances, except:

	A.	Business risk of investment project is similar to business risk of existing operations.
	B.	Incremental finance is raised in proportions that preserve existing capital structure.
	C.	Required return of existing finance sources is not affected by new investment project.
	D.	Use of CAPM will produce a conflicting result

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