Question: Using the WACC as the discount rate for future cash flows is only appropriate when the proposed investment is similar to the firm's existing activities.

Using the WACC as the discount rate for future cash flows is only appropriate when the proposed investment is similar to the firm's existing activities. Which of the following is not true for a firm that uses WACC to evaluate all types of investments?

The firm should accept positive NPV projects that are similar to the firm's existing activities

The firm will incorrectly reject some less risky projects

The firm should assume that all positive NPV projects are desirable projects

The firm will incorrectly accept some risky projects

The firm should reject negative NPV projects that are similar to the firm's existing activities

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