An Objective Approach to Calculating Divisional WACCs Would Be Done

question 53

Multiple Choice

An objective approach to calculating divisional WACCs would be done by

• A) simply considering the project's risk relative to the firm's lines of business and adjusting upward or downward to account for subjective opinions of project risk.
• B) computing the average beta for the firm, the firm's CAPM formula, and the firm's WACC.
• C) computing the average beta per division, using these figures for each division in the CAPM formula, and then constructing divisional WACCs.
• D) simply averaging out all the WACCs for all the firm's projects.

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Definitions:

Graphical Distribution

A visual representation of how values of a variable are distributed across different categories or intervals, often displayed as histograms or pie charts.

Relationship

The way in which two or more concepts, objects, or people are connected, or the state of being connected.

SAS Proficiency

A measure of one's skill and knowledge in using the Statistical Analysis System (SAS) software for data management and analysis.

Chi-square Test

An analytical procedure employed to find out if a considerable link is present between two categorical factors.