Which Two Factors Have Contributed to Joint Ownership of Large-Diameter

question 15

Multiple Choice

Which two factors have contributed to joint ownership of large-diameter pipelines?

• A) high variable costs of ownership and low rates
• B) economies of scale and high fixed costs of ownership
• C) government regulation and development funds
• D) rail competition and the growth of domestic water transport

Evaluate strategies for improving comprehension and knowledge retention.

Understand the principles of Modigliani & Miller (M&M) Propositions I & II without taxes, specifically regarding the irrelevance of capital structure.

Comprehend the effect of leverage on the cost of equity according to M&M Proposition II with no taxes.

Grasp the impact of debt financing on a firm's value and the cost of capital when taxes are considered.

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Definitions:

Revenue Expenditure

Expenses incurred during the normal course of business that are expected to be consumed within the current accounting period.

New Equipment

Capital assets recently acquired by a company for use in its operations, potentially enhancing productivity or efficiency.

Building Account

An account used to record the costs associated with the construction or purchase of a building over time, which may include materials, labor, and overhead.

Land Purchased

The act of buying land, which is considered a fixed asset and is recorded on the balance sheet at cost, without depreciation.