Identify a True Statement About a Large Firm That Has

question 54

Multiple Choice

Identify a true statement about a large firm that has organizational slack.

• A)The loss of an employee barely affects the abilities of its workforce.
• B)Each employee is crucial to the survival of the firm.
• C)The firm's knowledge is concentrated around a few key personnel.
• D)The firm enjoys extreme financial flexibility and can survive huge annual losses if necessary.

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Definitions:

Year-end UCC

The Undepreciated Capital Cost of an asset at the end of a fiscal year, relevant in tax calculations.

Net Capital Cost

The total cost of purchasing an asset including acquisition costs but net of any deductions, rebates, or subsidies.

Weighted Average Cost of Capital (WACC)

This is the average rate of return a company is expected to pay its security holders to finance its assets. WACC is the minimum return that a company must earn on an existing asset base to satisfy its creditors, owners, and other providers of capital.

Terminal Cash Flow

The final net cash flow in a series of cash flows, representing the net amount received or paid at the conclusion of a project or investment period.