Assume That an Organization's Weighted-Average Cost of Capital (Minimum Rate

question 38

Multiple Choice

Assume that an organization's weighted-average cost of capital (minimum rate of return) is 8% and that Division A currently has a 12% return on investment (ROI) . The manager of Department A, who is evaluated on the basis of divisional ROI, would most likely accept an investment that is expected to return:

• A) More than 8%.
• B) More than 12%.
• C) More than 8% but less than 12%.
• D) Less than 12%.
• E) Impossible to tell without further information.

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Definitions:

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