A firm has three divisions. A capital budgeting request has come through from Division C showing a
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Question:
A firm has three divisions. A capital budgeting request has come through from Division C showing a positive NPV at the firm's overall WACC. The financial manager of the firm knows that Division C is the riskiest of the three divisions. The financial manager should:
Deny the request since it was computed in error
Approve the request since it has a positive NPV
Ask that the NPV is recomputed at a cost of capital appropriate to the division
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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