The subjective approach to project analysis: a.is used only when a firm has an a

Question

The subjective approach to project analysis:
a.is used only when a firm has an all-equity capital structure.
b.uses the WACC of firm X as the basis for the discount rate for a project under consideration by firm Y.
c.assigns discount rates to projects based on the discretion of the senior managers of a firm.
d.allows managers to randomly adjust the discount rate assigned to a project once the project's beta has been determined.
e.applies a lower discount rate to projects that are financed totally with equity as compared to those that are partially financed with debt.

Explanation / Answer

b.uses the WACC of firm X as the basis for the discount rate for a project under consideration by firm Y.

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