True or false? a. The company cost of capital is the correct discount rate for all projects,

Question:

True or false?

a. The company cost of capital is the correct discount rate for all projects, because the high risks of some projects are offset by the low risk of other projects.

b. Distant cash flows are riskier than near-term cash flows. Therefore long-term projects require higher risk-adjusted discount rates.

c. Adding fudge factors to discount rates undervalues long-lived projects compared with quick-payoff projects.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...