Cranberry Corp

question 29

Multiple Choice

Cranberry Corp.has two divisions of equal size: a computer manufacturing division and a data processing division.Its CFO believes that stand-alone data processor companies typically have a WACC of 8%,while stand-alone computer manufacturers typically have a 12% WACC.He also believes that the data processing and manufacturing divisions have the same risk as their typical peers.Consequently,he estimates that the composite,or corporate,WACC is 10%.A consultant has suggested using an 8% hurdle rate for the data processing division and a 12% hurdle rate for the manufacturing division.However,the CFO disagrees,and he has assigned a 10% WACC to all projects in both divisions.Which of the following statements is CORRECT?

• A) While the decision to use just one WACC will result in its accepting more projects in the manufacturing division and fewer projects in its data processing division than if it followed the consultant's recommendation,this should not affect the firm's intrinsic value.
• B) The decision not to adjust for risk means,in effect,that it is favoring the data processing division.Therefore,that division is likely to become a larger part of the consolidated company over time.
• C) The decision not to adjust for risk means that the company will accept too many projects in the manufacturing division and too few in the data processing division.This will lead to a reduction in the firm's intrinsic value over time.
• D) The decision not to risk adjust means that the company will accept too many projects in the data processing business and too few projects in the manufacturing business.This will lead to a reduction in its intrinsic value over time.
• E) The decision not to risk adjust means that the company will accept too many projects in the manufacturing business and too few projects in the data processing business.This may affect the firm's capital structure but it will not affect its intrinsic value.

Understand the structural components of the ear and their role in hearing.

Learn about perceptual illusions and cultural differences in perception.

Describe the properties of sound and their parallels to visual properties.

Understand the concepts of top-down and bottom-up processing and their impact on perception.

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Definitions:

Lateral Hypothalamus

A part of the brain involved in controlling hunger and thirst.

Ventromedial Hypothalamus

A region of the brain involved in regulating hunger, satiety, and the body's energy homeostasis.

Thalamus

A major part of the brain located in the center of the brain, acting as a relay station for sensory information and playing a key role in the regulation of consciousness, sleep, and alertness.

Glucagon-like Peptide-1

A hormone involved in the regulation of blood sugar levels by enhancing the secretion of insulin.