Consider the Following Two Statements: (I) to Calculate the Cost

question 37

Multiple Choice

Consider the following two statements: (i) To calculate the cost of capital using the levered cash flow approach, we need a risk free rate.
(ii) The levered cash flow approach is only correct if the firm is borrowing to finance an investment.

• A)(i) is correct and (ii) is incorrect.
• B)(ii) is correct and (i) is incorrect.
• C)Both (i) and (ii) are correct.
• D)both (i) and (ii) are incorrect.
• E)leverage does not impact betas.

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Definitions:

Unionized Facility

A workplace where a labor union represents the interests of the employees and engages in collective bargaining with management for contracts covering wages, benefits, and working conditions.

Union Representation

The act of a union serving as the official body that negotiates and interacts with employers on behalf of its members.

National Labor Relations Act

A foundational US law enacted in 1935 that protects the rights of employees to organize, bargain collectively, and engage in other union activities.

Contract Clause

A specific provision or section within a contract that stipulates the obligations, rights, and responsibilities of the parties involved.