An Appropriate Guideline to Adopt When Determining the Valuation Formula

question 42

Multiple Choice

An appropriate guideline to adopt when determining the valuation formula to use is:

• A) never use the APV approach.
• B) use APV if the project is far different from scale enhancing.
• C) use WACC if the project is close to being scale enhancing.
• D) Both never use the APV approach; and use WACC if the project is close to being scale enhancing.
• E) Both use APV if the project is far different from scale enhancing; and use WACC if the project is close to being scale enhancing.

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