Question：Which of the following are arguments for using the weighted average cost of capital (WACC) in project appraisal?

　　A. New investments might have different business risk characteristics from the existing operations.

　　B. The company has a significant proportion of floating rate capital, the cost of which constantly fluctuates.

　　C. The new project might alter the financial risk of the whole company.

　　D. It should be used because the marginal cost of capital should be roughly equal to the weighted average cost of current capital.

　　The correct answer is: It should be used because the marginal cost of capital should be roughly equal to the weighted average cost of current capital.

　　解析：The company's existing WACC should be used in project appraisal if the cost of capital for the project is similar to the company's overall cost of capital.

　　We can assume this is the case if the company plans to invest in projects of a similar level of risk by raising funds in the same proportions as its existing capital structure in the future.

　　If the marginal cost of capital is expected to change (for example, if the project has a different risk profile from the other projects currently undertaken by the company), an alternative marginal cost of capital should be used.