When Determining a Firm's Weighted Average Cost of Capital (WACC)which

question 10

Multiple Choice

When determining a firm's weighted average cost of capital (WACC) which of the following terms is NOT necessary?

• A)The firm's weight of equity financing.
• B)The risk-free rate of return.
• C)The firm's weight of debt financing.
• D)All of the above are necessary to determine a firm's WACC.

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Definitions:

Fixed Costs

Fixed costs are business expenses that do not change regardless of the level of goods or services produced, such as rent, salaries, and insurance premiums.

Total Revenue

The total amount of money generated by a company from its business activities, such as sales of goods or services, before any expenses are subtracted.

Mass Customization

A manufacturing approach that allows for the personalization of products to meet individual customer needs at near mass production prices.

Institutional Buyers

Large organizations such as mutual funds, pension funds, and insurance companies that buy or sell large quantities of securities or goods.