One of the major issues firms must confront when implementing EVA on the business unit level is whether or not to differentiate the cost of capital per unit by the riskiness of its business. Business units operating in business segments that are of higher risk would be charged a higher cost of capital. Many firms, however, raise capital centrally and provide the capital at the same basic cost to each individual unit, regardless of risk. Prepare a one-page briefing for management on the pros and cons of differentiating the cost of capital when implementing an EVA system.