The Intuition for the WACC Method Is That the Firm's

question 60

Multiple Choice

The intuition for the WACC method is that the firm's weighted average cost of capital represents the average return the firm must pay to its ________ on an after-tax basis.

• A) creditors
• B) shareholders
• C) debtors
• D) investors

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Definitions:

Corporate Governance

Systems, principles, and processes by which a company is directed and controlled, focusing on the relationship among various stakeholders, including shareholders and the board of directors.

Stakeholder Interaction Model

A framework for analyzing how an organization interacts with and responds to the needs of those individuals or groups that have an interest in its activities.

Primary Stakeholders

Individuals or groups with a direct interest or stake in the outcome of a project, decision, or policy, such as employees, customers, and investors.