1. The cost of capital associated with a project depends on

Select one:

a. the whims of investors.

b. the management of the company that requires the funds.

c. the risk of the project.

d. the debt-equity ratio of the company that requires the funds.

e. the stability of the financial market.

2.

X-Tra Ltd. has a firm-wide WACC of 10%. However, it uses a projects unique risk and WACC in its capital budgeting decisions. This decision-making approach is called

Select one:

a. the net present value approach.

b. the subjective approach.

c. the systematic risk approach.

d. the discounted cash flow approach.

e. the pure play approach.