Which One of These Statements Correctly Applies to an Unlevered

question 7

Multiple Choice

Which one of these statements correctly applies to an unlevered firm that pays no taxes?

• A) The return on equity exceeds the WACC.
• B) The return on assets equals the return on equity and also equals WACC.
• C) The return on assets equals the return on equity and exceeds WACC.
• D) The return on equity equals WACC and exceeds the return on assets.

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Definitions:

Forecast Revenue

An estimate of future sales and income, usually based on past trends, market analysis, and other predictive measures.

Unit and Price Detail

Specific information concerning the quantity of goods or services along with their corresponding prices.

Subjective Benefits

Advantages or value perceived by individuals in a subjective manner, sometimes difficult to quantify, like job satisfaction or brand loyalty.

Quantified Biases

The attempt to measure and express cognitive biases and their impact on decision-making or behavior in numerical terms.