weighted average cost

Dear Sir:

I tend to choose option c) for this question. False for part I, as the normal project does not have that level of risks as the investment projects and True for part II. Kindly advise.

Thanks, Shams

The validity of using the existing weighted average cost of capital as the appropriate discount rate for deducing the net present value of a project rests on a number of key assumptions. These includes the following:

I. The investment project has the same level of risk as those projects normally undertaken by the business.
II. The existing capital structure will be maintained (same financial risk).

Which one of the following combinations (true/false) concerning the above statements is correct?

Please answer in the following order: Statement I/II
a) True/True
b) True/False
c) False/True
d) False/False