4. Berkshire Hathaway is a conglomerate run by Warren Buffett which holds large stakes in a variety of companies including wholly-owned subsidiaries, and is considering purchasing Benjamin Moore and Co. a painting supply company. Suppose that Berkshire Hathaway's weighted average cost of capital is 12%. If Benjamin Moore and Co. is substantially more risky than Berkshire Hathaway's other portfolio holding companies, it appropriate for Benjamin Moore and Co. to use Berkshire Hathaway's cost of capital rate. If Benjamin Moore and Co. uses Berkshire Hathaway's cost of capital as its WACC, this leads to the company incorrectly too many projects. The approach suggests that we can obtain a WACC for Benjamin Moore and Co. based on a peer firm's WACC such as Sherwin Williams. (a) is not; rejecting; Pure play (b) is not; accepting; Pure play (c) is not; rejecting; Subjective (d) is; rejecting; Subjective