StepbyStep explanation Should Le: use a single corporate-wide discount rate or multiple discount rates (one for each line of business) with which to evaluate investment projects? Please explain. Answer: Multiple discount rates should be utilized because each line of business has diflerent risks. Furthermore, according to Finance Theory, using several discount rates allows for a more accurate assessment of whether a project is worthwhile or not. The Weighted Average Cost of Capital MACC} calculation will be used to calculate the discount rates. WACC Formula [(Equity Ratio) x {Cost of Equity)] + [(Debt Ratio}I x (Cost of Debt) x (1 Tax Rate)] Cost of Eqmty Formula Rs: RF+31RM'RF} Line of Debt Cost of Tax Businesses Ratio Debt Rate Automotive 0.13 8.4% 33% Distribution Contract Hire 0.83 8.4% 33% Property 0.5?r 8.4% 33% Average Asset Beta Hale (B) 0.61 0.41 0.68 Market Rate {RM} 14.68% 14.68% 14.68% Risk-Free Rate (RF)I 7.2% 7.2% 7.2% Equity Ratio 0.8? 0.1? 0.43 Cost of Equity 11.?6% 10.27% 12.29% WAC C 1 0.97 6.42 8.49