Which of These Statements Is True Regarding Divisional WACC

question 90

Multiple Choice

Which of these statements is true regarding divisional WACC?

• A) Using a divisional WACC vs a WACC for the firm's current operations will result in quite a few incorrect decisions.
• B) Using a simple firmwide WACC to evaluate new projects would give an unfair advantage to projects that present more risk than the firm's average beta.
• C) Using a simple firmwide WACC to evaluate new projects would give an unfair advantage to projects that present less risk than the firm's average beta.
• D) Using a firmwide WACC to evaluate new projects would have no impact on projects that present less risk than the firm's average beta.

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Definitions:

Feedback Loops

Systems or processes where the output or result impacts or influences the input or action in a cycle, important in system regulation and learning.

Homeostasis

Homeostasis is the property of a system, such as the human body, to regulate its internal environment to maintain a stable, constant condition in response to changes in the external environment.

Hierarchical Disengagements

The process of detaching or withdrawing from levels of a structured order or authority system.

Primary Attachments

The initial deep and enduring emotional bonds formed in early childhood, particularly between infants and their caregivers.