Diversified Industries Is a Multiproduct Company Operating in a Number

Multiple Choice

Diversified Industries is a multiproduct company operating in a number of industries.Assume the company is analyzing a new project that has risks unrelated to those of the current company's products.When computing the net present value of the new project the cash flows should be discounted using

A) a rate based on a beta of one since the company is well diversified.
B) a rate based on the company's current beta.
C) the risk-free rate of return.
D) the market rate of return.
E) a rate commensurate with the risk level of the project.