Which of the Following Are Guidelines for the Three Methods

question 26

Multiple Choice

Which of the following are guidelines for the three methods of capital budgeting with leverage?

• A) Use APV if project's level of debt is known over the life of the project.
• B) Use APV if project's level of debt is unknown over the life of the project.
• C) Use FTE or WACC if the firm's target debt-to-value ratio applies to the project over its life.
• D) Both use APV if project's level of debt is known over the life of the project; and use FTE or WACC if the firm's target debt-to-value ratio applies to the project over its life.
• E) Both use APV if project's level of debt is unknown over the life of the project; and use FTE or WACC if the firm's target debt-to-value ratio applies to the project over its lifE.

---

Definitions:

Sensory Response

Sensory response is the reaction of a person's sensory systems, such as sight, hearing, smell, taste, or touch, to external stimuli.

Place Theory

A theory in hearing that suggests that our perception of sound depends on where each component frequency produces vibrations along the basilar membrane of the inner ear.

Frequency Theory

A theory in the study of hearing that suggests pitch is determined by the rate at which nerve impulses are fired in response to sound vibrations.

High Pitches

Sounds that have a high frequency, typically perceived as shrill or squeaky, easily distinguishable from lower pitch sounds.