When can the cost of capital for a company as a whole be a valid measure of the cost of capital for a particular project?
A)When market data are available.
B)When it is not practicable to estimate the cost of capital for individual projects.
C)When the risk of a new project is the same as the risk of the company's existing assets.
D)When CAPM is used as an EX POST model.

Question

Quizplus · Accepted Answer

The cost of capital for a company as a whole can be used for a particular project when the project's risk profile is similar to that of the company's existing assets, ensuring that the overall risk and return expectations align.

When Can the Cost of Capital for a Company as a Whole