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Assume that a firm is considering a capital investment with normal cash flows. If the capital investment would not change the risk of the firm,
Assume that a firm is considering a capital investment with normal cash flows. If the capital investment would not change the risk of the firm, which of the following is correct?
A. The firm should invest in the capital project if the future cash flows are positive.
B. The firm should invest in the capital project since the risk of the firm does not change.
C. The firm should invest in the capital project only if the projects rate of return exceeds the cost of capital.
D. There is insufficient information to answer the question.
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