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Suppose a firm uses a corporate-wide WACC in a multi-divisional firm. Which of the following statement(s) is (are) correct: 1.The use of a corporate-wide cost
Suppose a firm uses a corporate-wide WACC in a multi-divisional firm. Which of the following statement(s) is (are) correct:
1.The use of a corporate-wide cost of capital would allocate too much capital to the riskier divisions.
2.Multi-divisional companies should use a common corporate-wide hurdle rate.
3.The use of a corporate-wide cost of capital would allocate too much capital to the less risky divisions.
4.The use of a corporate-wide cost of capital could lead to the rejection of some projects in the less risky divisions.
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