What will happen over time if a firm uses its overall WACC to evaluate all projects, regardless of each project's risk level?

What will happen over time if a firm uses its overall WACC to evaluate all projects, regardless of each project's risk level?



Answer:

1. It will reject projects that it should have accepted..


2. It will accept projects that it should have accepted.

3. The firm's overall will become riskier.


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