In What Stage of the Capital-Budgeting Process Do Top Managers

question 100

Multiple Choice

In what stage of the capital-budgeting process do top managers ask marketing managers for potential revenue numbers,plant managers for assembly times,and suppliers for prices and the availability of key components.

• A)Stage 1: Identify projects.
• B)Stage 2: Obtain information.
• C)Stage 3: Make predictions.
• D)Stage 4: Make decisions by choosing among the alternatives.
• E)Stage 5: Implement the decision,evaluate performance,and learn.

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Definitions:

After-Tax Cost of Debt

The net cost of debt after accounting for the effects of taxes, reflecting the actual cost to a company.

Cost of Equity

The theoretical compensation paid by a company to its equity investors, or shareholders, for the risk involved in investing their capital.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay to all its security holders to finance its assets.

WACC

Weighted Average Cost of Capital; a formula used to calculate a business's cost of capital, where every type of capital is weighted according to its proportion.