Firms That Have Many Divisions with Different Lines of Business

question 23

True/False

Firms that have many divisions with different lines of business should still use a companywide WACC to evaluate projects.

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Definitions:

Proprietors' Income

The income earned by the owners of unincorporated businesses from their business activities.

Present Value

The value today of a sum of money or sequence of cash flows expected in the future, discounted by a certain rate of return.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Payday Loans

Short-term, high-interest loans that are typically due on the borrower’s next payday.