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Options for Q1 already listed above Options for Q2 A. pure-play companies in the new era B. the firms previous projects Options for Q3 already
Options for Q1
already listed above
Options for Q2
A. pure-play companies in the new era
B. the firms previous projects
Options for Q3
already listed above
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6. Within-firm risk and beta risk Aa Aa Understanding risks that affect projects and the impact of risk consideration Yatta Net International has manufacturing, distribution, retail, and consulting divisions. Projects undertaken by the manufacturing and distribution divisions tend to be low-risk projects, because these divisions are well established and have predictable demand. The company started its retail and consulting divisions within the last year, and it is unknown if these divisions will be profitable. The company knew that opening these new divisions would be risky, but ts management believes the divisions have the potential to be extremely profitable under favorable market conditions. The company is currently using its WACC to evaluate new projects for all divisions. Q1 If Yatta Net International does not risk-adjust its discount rate for specific projects properly, which of the following is likely to occur over time? Check all that apply. The firm's overall risk level will increase. The firm could potentially reject projects that provide a higher rate of return than the company should require. The firm will increase in value. Q2 When a project involves an entirely new product line, the firm may be able to obtain betas from to calculate a weighted average cost of capital (WACC) for its new productStep by Step Solution
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