A Firm That Uses Its Weighted Average Cost of Capital

Multiple Choice

A firm that uses its weighted average cost of capital as the required return for all of its investments will:

A) maintain a constant value for its shareholders.
B) increase the risk level of the firm over time.
C) make the best possible accept and reject decisions related to those investments.
D) find that its cost of capital declines over time.
E) accept only the projects that add value to the firm's shareholders.