The Total Market Value of Downunder Minerals Is $10 Billion

question 47

Multiple Choice

The total market value of Downunder Minerals is $10 billion. The company has a market value of $7 billion of equity and a face value of $10 billion of debt. What are the weights in equity and debt that are used for calculating the WACC?

• A) 0.3, 0.7
• B) 0.7, 0.3
• C) 0.6, 0.4
• D) cannot be determined

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Definitions:

Resources

Assets, materials, and inputs that an organization or individual utilizes to conduct operations, create products, or provide services.

Work

The effort or activity directed toward the production or accomplishment of something.

Employees

Individuals who are hired by a business or organization to perform work and are typically paid wages or salaries in return for their labor.

Resource Allocator

A role in management that involves deciding how to distribute resources effectively to achieve specific goals and objectives.