If a Firm Earns the WACC as an Average Return

question 115

Multiple Choice

If a firm earns the WACC as an average return on its average-risk assets, then:

• A)Equity holders will be satisfied, but bondholders will not
• B)Bondholders will be satisfied, but equity holders will not
• C)All investors will earn their minimum required rate of return
• D)The firm is investing only in positive NPV projects

---

Definitions:

Accuracy

The degree to which a measurement, estimation, or representation matches or faithfully reflects the actual value or reality.

Everyday Situations

Scenarios or conditions that occur regularly in daily life, involving typical tasks, interactions, or challenges faced by individuals.

Examples

Specific instances or cases used to illustrate a concept, principle, or method.

Vary

To differ in size, amount, degree, or nature from something else of the same general class.