Using Market Values Rather Than Book Values for Cost of Capital

question 21

Multiple Choice

Using market values rather than book values for cost of capital computations insures that the firm:

• A)Does not ignore the value of retained earnings
• B)Gets the full value of the debt tax shield
• C)Uses expected rates of return
• D)Will not invest in negative NPV projects

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Definitions:

Moral Leadership

Leadership that is centered on ethical principles and values and leads by example in encouraging a high standard of moral conduct within an organization or community.

Ethical Principles

Guiding morals and values that govern the behavior of individuals and organizations in the conduct of their activities.

Interactive Leadership

A leadership approach that emphasizes open communication, participation, and collaboration among team members and leaders.

Diverse Workforce

A labor pool that includes individuals of varying gender, race, religion, nationality, sexual orientation, and any other attributes where differences are valued.