Which of the Following Is a Reason Why the Divisional

question 111

Multiple Choice

Which of the following is a reason why the divisional cost of capital approach may cause problems if new projects are assigned to the wrong division?

• A) Managers in different divisions may use different methods to calculate the WACC.
• B) The expected return of the new project may be incorrect.
• C) If projects are assigned to the wrong division, the risk of that division may be significantly different than the risk of the project, implying that the project will be evaluated with a divisional cost of capital that is much different from what a project-specific cost of capital would be.
• D) None of these choices are correct.

Grasp the implications of partner liability for actions within the partnership.

Know the process and components involved in winding up a partnership.

Understand the liability implications for partners upon dissociation or retirement from a partnership.

Comprehend how the UPA and RUPA differ in terms of partner authority, liability, and dissolution procedures.

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Definitions:

Social Loafing

The tendency to put forth less effort when working with others on a common task than when working alone.

Compliance

The act of conforming to a request or demand, often studied in social psychology.

Groupthink

A phenomenon that occurs within a group of people, in which the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Social Loafing

The phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.