The discount rate which a company should apply to a new project should: a.depend on the source
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Question:
The discount rate which a company should apply to a new project should:
a.depend on the source of the funds used for that particular project.
b.be equal to the cost of debt or equity, depending on which type of financing the firm uses the most.
c.be the internal rate of return (IRR) for the project.
d.be firms overall weighted cost of capital (WACC).
e.the weighted cost of capital adjusted for the risk of the project if it isn't similar to the firm's overall riskiness.\
why the answer is e?
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