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1. Why should the required rate of return for a capital budgeting problem be project specific? Doesn't the firm just have to satisfy an overall cost-of-capital requirement?

2. What is the conceptual foundation of the flow-to- equity approach to capital budgeting?

3. What is the weighted average cost of capital?

4. Should a firm ever accept a project that has a negative NPV when discounted at the weighted average cost of capital?

5. Can you do capital budgeting for a foreign project using a domestic currency discount rate? Explain your answer.

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