Accept low-risk projects prior to funding high-risk projects

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Reference no: EM13950040

Which one of the following statements is correct?

Firms that elect to use the pure play method for determining a discount rate for a project cannot subjectively adjust the pure play rate.

A project that is unacceptable today might be acceptable tomorrow given a change in market returns.

Firms should accept low-risk projects prior to funding high-risk projects.

The pure play method is most frequently used for projects involving the expansion of a firm's current operations.

Making subjective adjustments to a firm's WACC when determining project discount rates unfairly punishes low-risk divisions within a firm.

Reference no: EM13950040

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