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4. If a firm applies the same discount rate to all projects for all of its divisions, the firm will incorrectly evaluate projects and will

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4. If a firm applies the same discount rate to all projects for all of its divisions, the firm will incorrectly evaluate projects and will also become riskier over time. Explain why this occurs and how it can be prevented. [Ch 13] 5. M&M Proposition I, without taxes, is referred to as the pie model. Explain why the size of the pie remains constant as the debt-equity ratio of a firm increases

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