Procter & Gamble Buys Unprocessed Logs,which Are Handled as Little

question 146

Multiple Choice

Procter & Gamble buys unprocessed logs,which are handled as little as needed to move them to its plant.Eventually,they become part of P&G's disposable diapers and are considered an expense item on P&G's income statement.For P&G,logs are

• A)farm products.
• B)supplies.
• C)component parts.
• D)component materials.
• E)raw materials.

Understand the impact of risk on the cost of capital components and the overall WACC.

Understand the relationship between the returns required by investors and the firm's cost of capital components.

Recognize the significance of market values in calculating the cost of capital over book values.

Know the concept of target capital structure and its relevance to the WACC.

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Definitions:

Cash Balance Target

A strategy where a company aims to maintain a specific amount of cash on hand to meet operational and emergency needs.

Weekly Interest Rate

An interest rate quoted or applied on a weekly basis, often used in short-term loans or savings accounts to indicate the rate of interest over a week's period.

Marketable Securities

Financial instruments that can be quickly converted to cash at market value.

Monthly Standard Deviation

A statistical measure that quantifies the variability or volatility of returns over a monthly period.