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A company like GE cannot use one WACC benchmark for every single project. Otherwise, it may...

A company like GE cannot use one WACC benchmark for every single project. Otherwise, it may incorrectly accept/reject some projects. Find an example of another such company which should use multiple required rates of return for the capital budgeting decisions.

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Answer #1

GE is a diversified enterprise having presence in all continents of the globe and involved in a variety of business sectors. The risk classes of every project that GE undertakes vary according to the industry sector as well as geographical location. Therefore, using one WACC benchmark for every single project will not work for GE as costs of equity and debt vary across geographical markets as well as sectors. Another example of a company like GE would be Siemens AG which is a competitor of GE in many markets across the same industry sectors and product portfolios.

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