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Your firm evaluates average risk projects using a 10% cost of capital. Projects that are above-average risk are assigned a discount rate of 13% while
Your firm evaluates average risk projects using a 10% cost of capital. Projects that are above-average risk are assigned a discount rate of 13% while below-average risk projects are assigned a discount rate of 7%. The approach used by your firm is best described as the:?
Pure play approach.
Dividend growth model approach.
Leverage approach.
CAPM approach.
Subjective approach.
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