Multidivisional Companies with Diverse Operations Should Use an Interest Rate

Multiple Choice

Multidivisional companies with diverse operations should use an interest rate for discounting a specific division's estimated cash flows in capital budgeting that is representative of:

A) the entire firm's cost of capital.
B) the riskiness of the specific division's cash flows.
C) the cost of capital obtained through the application of the pure play method.
D) Either b or c