The corporate cost of capital provides a benchmark for deter

The corporate cost of capital provides a benchmark for determining a project’s cost of capital. In general, a project that is riskier than average will have a cost of capital that is higher than the corporate cost of capital, while a project that is less risky than average will have a cost of capital that is less than the corporate cost of capital.

Solution

When the project is risky, appropriate risk premium is added for compensating risk undertaken. If the firm accepts lower risk projects, risk premium should not be deducted. WACC is the minimum hurdle rate.

Hence, given statement is False.