A Firm Uses Its Weighted Average Cost of Capital to Evaluate

question 13

Multiple Choice

A firm uses its weighted average cost of capital to evaluate the proposed projects for all of its varying divisions. By doing so, the firm:

• A) automatically gives preferential treatment in the allocation of funds to its riskiest division.
• B) encourages the division managers to only recommend their most conservative projects.
• C) maintains the current risk level and capital structure of the firm.
• D) automatically maximizes the total value created for its shareholders.
• E) allocates capital funds evenly amongst its divisions.

---

Definitions:

Medication-Dispensing Device

A machine or tool designed to accurately dispense prescribed drugs to patients.

Nasogastric Tube

A medical device inserted through the nose into the stomach to deliver food and medicine, or to remove substances from the stomach.

Hospitalized Patient

A patient who has been admitted to a hospital for treatment and observation.

Restraint

A measure or device used to limit the movement or activity of a person or part of the body, often for safety or medical reasons.