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

question 5

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:

Corporate Insurance

A type of insurance designed to protect businesses from potential losses due to unforeseen circumstances, including property damage, liability claims, and business interruption.

Problem-solution

rephrased: An approach that involves identifying a specific issue and subsequently proposing one or more solutions to address that issue, widely used in sales, engineering, and policy-making.

Problem-solution

A method of structuring communication where a problem is identified and then resolved, commonly used in sales and marketing.

Proposal

A detailed plan or suggestion, often a document put forward for consideration to initiate a project or sale.