Assume JBH Has Debt with a Book Value of $20

question 49

Multiple Choice

Assume JBH has debt with a book value of $20 million, trading at 120% of par value. The firm hasbook equity of $20 million, and 2 million shares trading at $18 per share. What weights should JBH use in calculating its WACC?

• A) 36% for debt, 64%% for equity
• B) 40% for debt, 60% for equity
• C) 45% for debt, 55% for equity
• D) 50% for debt, 50% for equity

Describe methods to engage various groups in the decision process, highlighting the benefits of brainstorming and focus groups.

Acknowledge the limitations and biases inherent in human decision-making, including groupthink and misallocation of resources.

Understand different decision-making models and their characteristics.

Identify the impacts of psychological phenomena on managerial decision-making.

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Definitions:

Higher Earnings

Increased income from wages, salaries, investments, or other sources, typically compared to a previous period or average.

Better-Educated

Referring to individuals who have received a higher level of formal education, often resulting in improved skills, knowledge, and job opportunities.

Human-Capital Theory

A theory that views individuals' skills and knowledge as valuable assets that can enhance their productivity and income.

Education

The process of receiving or giving systematic instruction, especially at a school or university.