A Firm Should Consider Using ________ Approach If It Only

question 140

Multiple Choice

A firm should consider using ________ approach if it only calculates the WACC for the firm as a whole, yet it has divisions with substantially different risk characteristics.

• A) An unbiased.
• B) An empirical.
• C) An objective.
• D) A subjective.
• E) A simulation.

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Definitions:

Accelerated Depreciation

A method of depreciation that allows a business to allocate larger portions of the cost of an asset to earlier years of its useful life.

Financing Costs

Expenses a company bears to finance its operations, including interest payments on debt, and costs associated with issuing new stock or debt.

Net Working Capital Requirement

The amount of current assets a company needs minus its current liabilities to continue its operations smoothly.

Marginal Tax Rate

The rate at which your last dollar of income is taxed, representing the percentage of tax applied to your income for each tax bracket in which you qualify.