The WACC Is Used to _______ the Expected Cash Flows

question 35

Multiple Choice

The WACC is used to _______ the expected cash flows when the firm has ___________.

• A) discount; debt and equity in the capital structure.
• B) capitalize; short term financing on the balance sheet.
• C) increase; debt and equity in the capital structure.
• D) decrease; short term financing on the balance sheet.

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Definitions:

X-axis

The horizontal axis in a two-dimensional graph, typically representing the independent variable.

Positive Relationship

A positive relationship in economics indicates that an increase in one variable is associated with an increase in another variable.

Cartesian Coordinate System

A coordinate system that specifies each point uniquely in a plane by a set of numerical coordinates, which are the distances to the point from two perpendicular directed lines.

Variable

An element, feature, or factor that is likely to vary or change; in scientific experiments, the characteristic that is tested to observe its effects.