When a Company Has an ROIC Greater Than Its Cost

question 5

Multiple Choice

When a company has an ROIC greater than its cost of capital,faster growth increases value,but when it has an ROIC less than its cost of capital,what is the effect on value?

• A)Faster growth creates value.
• B)Faster growth destroys value.
• C)Growth doesn't impact value creation.
• D)None of the above are true.

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Definitions:

Plastic Resin

A solid or highly viscous substance of plant or synthetic origin that is typically convertible into polymers.

Resin Cost

The price associated with acquiring resin materials, which are often used in manufacturing processes for plastics and polymers.

Materials Purchases Budget

An estimation of the total cost of materials required for production, planned for a specific period.

Direct Labor

The cost of wages for employees who are directly involved in producing goods or providing services.