Question

is a multi-division firm that uses its overall WACC as the discount rate for all proposed projects. Each division is in a separate line of business and each presents risks unique to those lines. Given this, a division within the firm will tend to: have an equal probability with all the other divisions of receiving funding. receive less project funding if its line of business is riskier than that of the other divisions. become less risky over time based on the projects that are accepted. avoid risky projects so it can receive more project funding. prefer higher risk projects over lower risk projects.

Answer 1

Answer:

The right answer to this question is to choose higher-risk projects over low-risk projects.

Explanation:

Jenner is a multi-division company that uses its overall WACC as a discount rate for all proposed projects. Every division is in a different line of business, every of which poses risks specific to those divisions.

WACC lowered the overall expense of the various sources of finance by using the mechanics involved in calculating the costs of these sources of fluidity. Organizations use the hybrid structure that costs the customer to the organization to save the source of funding in WACC.