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:

Division of Labor

Division of labor is the allocation of different tasks to different people or groups within an organization, aimed at increasing efficiency by specializing in specific functions.

Coordination

The organization of the different elements of a complex body or activity so as to enable them to work together effectively.

Departmentalization

The organizational process of dividing a business into distinct departments, each focused on a specific operational area.

Organizational Growth

The process through which a business expands its size, scope, or capabilities, often measured in terms of increased output, sales, or market share.