Question: HT Fox Industries has multiple divisions which operate as separate lines of business and face risks unique to those lines. The firm uses its overall

HT Fox Industries has multiple divisions which operate as separate lines of business and face risks unique to those lines. The firm uses its overall WACC as the discount rate to evaluate all proposed projects. Horton T. Fox, CEO, is considering investing in businesses with a different level of risk than his other businesses. If he use the WACC to evaluate these investments, what type of mistake is he likely to make?

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