Kurt, Who Is a Divisional Manager, Continually Brags That His

question 77

Multiple Choice

Kurt, who is a divisional manager, continually brags that his division's required return for its projects is one percent lower than the return required for any other division of the firm.Which one of the following most likely contributes the most to the lower rate requirement for Kurt's division?

• A)Kurt tends to overestimate the projected cash inflows on his projects.
• B)Kurt tends to underestimate the variable costs of his projects.
• C)Kurt has the most efficiently managed division.
• D)Kurt's division is less risky than the other divisions.
• E)Kurt's projects are generally financed with debt while the other divisions' projects are financed with equity.

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Definitions:

Need for Achievement

Denotes an individual's drive to excel, achieve set goals, and accomplish tasks in a defined standard of excellence.

Learned Needs

Needs that are acquired or developed over time as a result of one's experiences and socialization.

Executive Positions

High-level roles in a corporation tasked with making strategic decisions, overseeing operations, and managing resources and staff.

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