Under Normal Circumstances, the Weighted Average Cost of Capital Is

question 50

Multiple Choice

Under normal circumstances, the weighted average cost of capital is used as the firm's required rate of return because

• A)as long as the firm's investments earn returns greater than the cost of capital, the value of the firm will not decrease.
• B)returns below the cost of capital will cover all the fixed costs associated with capital and provide excess returns to the firm's stockholders.
• C)it is comparable to the average of all the interest rates on debt that currently prevail in the financial markets.
• D)it is an indication of the return the firm is earning from all of its assets in combination.

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Definitions:

Leadership Strategy

A plan or approach implemented by leaders to motivate, influence, and guide their team or organization towards the achievement of set goals.

Corporate Strategies

The comprehensive plans and actions that a company undertakes to achieve its long-term goals and objectives.

Intended Strategies

These are strategies that an organization plans and decides to implement in order to achieve specific goals or objectives.

Organizational Planning

The process of setting goals and defining the steps needed to achieve them within an organization.