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If a project has a higher proportion of fixed to variable costs, holding the risk of its revenues ...

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If a project has a higher proportion of fixed to variable costs, holding the risk of its revenues ...

If a project has a higher proportion of fixed to variable costs, holding the risk of its revenues constant:
A) its beta will be lower, hence its cost of capital will be lower.
B) its beta will be higher, hence its cost of capital will be higher.
C) its beta will be unaffected, since beta does not measure the sensitivity of the project's cash flows to market risk.
D) its financial leverage will be higher.

Textbook

Corporate Finance: The Core

Edition: 4^th

Authors: Berk, DeMarzo

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EgorGruzdev

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More solutions for this book are available here

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johnpaech Author

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6 years ago

Thanks for your help!!

zsc999

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Correct

acaruso

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