Which of the Following Is NOT a Step in the WACC

question 93

Multiple Choice

Which of the following is NOT a step in the WACC valuation method?

• A)Compute the value of the investment,including the tax benefit of leverage,by discounting the free cash flow of the investment using the WACC.
• B)Compute the weighted average cost of capital.
• C)Determine the free cash flow of the investment.
• D)Adjust the WACC for the firm's current debt/equity ratio.

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Definitions:

Power Factor

A measure of how effectively electrical power is converted into useful work output, representing the ratio of the real power flowing to the load to the apparent power in the circuit.

RLC Parallel Circuit

An electrical circuit consisting of resistors (R), inductors (L), and capacitors (C) connected in parallel, affecting the impedance and phase of the circuit.

Inductive VARs

Volt-Amps Reactive attributed to inductance in a circuit, representing power that oscillates between the source and an inductive load but does not perform work.

Impedance

A measure of the opposition that a circuit presents to the passage of a current when a voltage is applied, incorporating both resistance and reactance.