If a company uses the same WACC for all of its capital budgeting decisions, which will a division within the company tend to do? (Mark the best answer and explain.)

• Receive less project funding if its line of business is riskier than that of the other divisions.
• Avoid risky projects so it can receive more project funding.
• Prefer higher risk projects over lower risk projects.
• Become less risky over time based on the projects that are accepted.
• None of the above.