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What explains the differences in the divisional WACC?

What explains the differences in the divisional WACC?

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The divisional Weighted Average Cost of Capital is known as the hurdle rate or the discount rate for evaluating the projects or divisions with different risk in comparison to the company's overall risk. Different divisions have different risk and they must be evaluated differently. Like mobile munufacturing unit is different from mobile software unit which involve different risk to each unit, therefore they must be evaluated on the basis of divisional WACC and not merely the WACC. Divisional WACC is the adjusted WACC which specifically designed for projects with different risk involvement. Thus, divisional WACC is the discount rate for evaluating the divisions with different risk.

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