Which of the following statements is FALSE?
A)In the real world,specific projects should differ only slightly from the average investment made by the firm.
B)We can estimate rU for a new project by looking at single-division firms that have similar business risks.
C)The project's equity cost of capital depends on its unlevered cost of capital,rU,and the debt-equity ratio of the incremental financing that will be put in place to support the project.
D)Projects may vary in the amount of leverage they will support-for example,acquisitions of real estate or capital equipment are often highly levered,whereas investments in intellectual property are not.

Question

Quizplus · Accepted Answer

This statement is false because specific projects can vary greatly from the average investment made by the firm due to factors such as size, industry, and risk level. It is important to evaluate each project on its own merit rather than solely comparing it to the firm's average investment.

Which of the Following Statements Is FALSE