Question: Your firm evaluates average risk projects using a 10% cost of capital. Projects that are above-average risk are assigned a discount rate of 13% while

Your firm evaluates average risk projects using a 10% cost of capital. Projects that are above-average risk are assigned a discount rate of 13% while below-average risk projects are assigned a discount rate of 7%. The approach used by your firm is best described as the:?

Pure play approach.

Dividend growth model approach.

Leverage approach.

CAPM approach.

Subjective approach.

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