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One assumption underlying the use of the cost of capital to analyze capital projects is that:

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One assumption underlying the use of the cost of capital to analyze capital projects is that:

 Options:

A. current costs will remain the same
B. capital structure will vary with the type of financing
C. different risk projects are required to diversify the firm
D. the analyzed projects are of comparable risk to existing projects

 

The Correct Answer Is:

  • D. the analyzed projects are of comparable risk to existing projects

 

Conclusion

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