Which of the Following Statements Describes a Limitation of the WACC

question 12

Multiple Choice

Which of the following statements describes a limitation of the WACC approach?

• A)The WACC approach can give misleading results if it is used to analyse investment decisions rather than financing decisions.
• B)There is no consensus on the taxation issues surrounding the inclusion of strategic options in the WACC approach,which can lead to incorrect inferences.
• C)Has no practical application.
• D)Can only be used directly for the whole company and to evaluate new projects that are identical to the company's existing operations.

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Definitions:

Big Five Traits

A model outlining five broad dimensions of personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Multipersonality Disorder

A mental disorder, more accurately referred to as Dissociative Identity Disorder, characterized by the presence of two or more distinct personality states within a single individual.

Ego-Syntonic

Refers to thoughts, feelings, beliefs, or behaviors that one accepts as part of oneself and does not want to be cured of, even if others find them difficult to deal with.

Ego-Dystonic

Referring to thoughts, impulses, and behaviors that are felt to be repugnant, distressing, unacceptable, or inconsistent with one's self-concept.