Question

Firms raise capital at the total corporate level by retaining earnings and by obtaining funds in the capital markets. They then provide funds to their different divisions for investment in capital projects. The divisions may vary in risk, and the projects within the divisions may also vary in risk. Therefore, it is conceptually correct to use different risk-adjusted costs of capital for different capital budgeting projects. true or false?

Answer 1

True

Step-by-step explanation:

It is correct to use different risk adjusted costs of capital for different capital budgeting projects because they represent different risks and have different pay-offs in the different options of succes that those projects may have, this is mostly use to maximize the opportunity of cost-benefit that certain projects could have and to see and calculate how to better use our cash flow.