Bloom and Co

question 46

Multiple Choice

Bloom and Co. has no debt or preferred stockσit uses only equity capital, and has two equally-sized divisions. Division X's cost of capital is 10.0%, Division Y's cost is 14.0%, and the corporate (composite) WACC is 12.0%. All of Division X's projects are equally risky, as are all of Division Y's projects. However, the projects of Division X are less risky than those of Division Y. Which of the following projects should the firm accept?

• A) a division y project with a 12% return.
• B) a division x project with an 11% return.
• C) a division x project with a 9% return.
• D) a division y project with an 11% return.
• E) a division y project with a 13% return.

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Definitions:

Schizophrenia

A neurological disorder characterized by distortions in thinking, perception, emotions, language, sense of self, and behavior.

Antipsychotic Medication

Drugs used to manage psychosis, including hallucinations and delusions, primarily in conditions like schizophrenia and bipolar disorder.

Schizophrenia

Schizophrenia is a chronic and severe mental disorder that affects how a person thinks, feels, behaves, and perceives reality, often involving hallucinations and delusions.

Hospital Records

Documents that contain detailed accounts of a patient's medical history, treatments received, and progress notes, maintained by healthcare institutions.