Which of the Following Is an Important Assumption Required If

question 20

Multiple Choice

Which of the following is an important assumption required if using the WACC formula?

• A)Companies rebalance their capital structure to maintain a constant debt ratio.
• B)WACC must be used on public companies with actively traded securities.
• C)Management bonuses must be added back to free cash flows.
• D)The firm cannot issue any further debt without adjusting its WACC.

---

Definitions:

Compiling

The process of converting source code written in a high-level programming language into machine code that a computer's processor can execute.

Interpreting

The process of converting spoken or signed communication from one language to another, facilitating understanding between parties who do not share a common language.

4GL

Fourth Generation Languages, a class of programming languages more advanced and closer to human language compared to their predecessors.

Object-oriented

A software development approach centered around the idea of "objects", which hold data as attributes and functionality as methods.