The Subjective Approach

question 55

Multiple Choice

The subjective approach:

• A) Can be defined as a stair step method of applying WACC.
• B) Is the method of using information from another firm when calculating WACC.
• C) Employs pure play strategy.
• D) Is defined as the application of one cost of capital rate to all projects under consideration.
• E) Is defined as the inclusion of flotation costs in the WACC.

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Definitions:

Constituencies

Groups of supporters, customers, or potential voters who back a particular organization, politician, or political agenda.

Agents

Individually authorized entities or people who act on behalf of others in various transactions or negotiations.

Use

Use refers to the act of employing something or someone for a particular purpose.

Exceeding Authority

Acting beyond or exceeding the powers or rights officially granted to an individual or body.