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25 July, 16:42

Firms raise capital at the total corporate level by retaining earnings and by obtaining funds in the capital markets. They then provide funds to their different divisions for investment in capital projects. The divisions may vary in risk, and the projects within the divisions may also vary in risk. Therefore, it is conceptually correct to use different risk-adjusted costs of capital for different capital budgeting projects.

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  1. 25 July, 18:41
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    The given statement is True

    Explanation:

    A firm can easily raise its capital either by retaining funds of profits or by receiving funds from the outer market and then such collected funds are invested by firms in the various projects which are capital projects. The risk factor in both may vary that is in divisions and the different projects that are within the divisions. Thus, conceptually it is correct
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