DQ: Corporate Finance 571

ANSWER: Minimum 300 words, non-pllagiarzied, respond to the question below...

Suppose a firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects, even though the projects have a wide range of nondiversifiable risk. The firm then undertakes all these projects that appear to have positive NPVs. Can you explain why such a firm would tend to become riskier over time?