Question
when a division of a firm is quite different from average firm operations, which of the following statements is true regading the cost of capital
when a division of a firm is quite different from average firm operations, which of the following statements is true regading the cost of capital for the division's project?
a. we cannot use firm's WACC as the cost of capital for the division's project.
b. we can adjust the firm's WACC to estimate the cost of capital for the division project based on the relative riskiness of the division to the average firm
c. we can use pure play method to find the opportunity cost of capital for the division project
d. we can estimate accounting beta to find the cost of capital for the division project.
e. all statemens are true.
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