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

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Definitions:

Antislavery

Opposition to slavery and the slave trade.

Declaration of Independence

The formal statement written by Thomas Jefferson declaring the freedom of the thirteen American colonies from British rule.

Hypocrisy

The behavior of individuals who express values, beliefs, or virtues they do not genuinely hold or abide by themselves.

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Armed groups formed from the civilian population during the colonial period to defend territories against enemies, notably before the establishment of regular armies.