When using a single rate, such as the WACC, to discount cash flows for all projects of a particular company, the discount rate could lead to accepting projects that will actually have a negative NPV.

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Using a single discount rate for all projects may not be appropriate as different projects may have different risk profiles and require different discount rates. If the discount rate is too low, it may lead to accepting projects with negative NPVs, indicating that the project will actually decrease the value of the company.

When Using a Single Rate, Such as the WACC, to Discount