Professor Very Busy Needs to Allocate Time Next Week to Include

question 9

Multiple Choice

Professor Very Busy needs to allocate time next week to include time for office hours. He needs to forecast the number of students who will seek appointments. He has gathered the following data:

What is this week's forecast using the naive approach?

• A)35
• B)50
• C)52
• D)65
• E)78

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Definitions:

Weighted Average Cost of Capital (WACC)

A calculation of a firm's cost of capital where each category of capital is proportionately weighted, used to assess the average rate a company is expected to pay to its security holders.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often estimated using the Capital Asset Pricing Model (CAPM).

Pre-Tax Cost of Debt

The rate of return that a company pays on its debt, before taking into account tax deductions.

Face Value

The nominal value printed on a bond or security which indicates its worth at maturity but does not necessarily reflect its market value.