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Firm discounts the cash flows of the project

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Arena Dog Chomps Gourmet Dog Food has a WACC of 12.25%. The average beta of the firm's projects adjusted for debt financing is 1.25. The firm is considering a new line of dehydrated dog food products for backpackers to carry while hiking with their pets. The estimated beta of this project is 1.50. If the firm discounts the cash flows of the project at the WACC, they run the risk of

A incorrectly accepting a negative NPV project from using a discount rate that is too high.
B incorrectly rejecting a positive NPV project from using a discount rate that is too high.
C incorrectly rejecting a positive NPV project from using a discount rate that is too low.
D incorrectly accepting a negative NPV project from using a discount rate that is too low.

Reference no: EM132288700

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