Which of the Following Statements Is True

question 5

Multiple Choice

Which of the following statements is true?

• A) Using the same WACC to discount all a firm's potential investments is a sound financial practice.
• B) When a firm has debt in its capital structure,the cost of equity is the appropriate discount rate to use in NPV calculations.
• C) If an investment being evaluated has higher risk than the firm's current set of projects,the firm's WACC is the appropriate discount rate to use.
• D) Statements (a)and (b)are true
• E) All of the above statements are false.

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Definitions:

Automation

The use of machines and technology to perform tasks without human intervention, often to enhance efficiency and accuracy.

Modularizing

The process of breaking down a system into smaller, independent modules that can be developed, tested, and deployed separately.

External Product Development

The process of creating new products or making improvements with the aid of external partners or resources.

Enhancements

Improvements or upgrades made to products, services, or systems to increase functionality or performance.