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If a firm uses the weighted average cost of capital (WACC) to discount cash flows of higher than average risk projects, which one of the

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If a firm uses the weighted average cost of capital (WACC) to discount cash flows of higher than average risk projects, which one of the following will most likely occur? Project NPV will be understated The firm will reject profitable projects The overall risk of the firm will rise over time The firm will not be able choose among mutually exclusive projects. None of the above

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