When We Use the WACC to Assess a Project, We

question 82

Multiple Choice

When we use the WACC to assess a project, we assume that the ________ ratio does not change.

• A)volatility to systematic risk
• B)debt-to-equity
• C)risk to reward
• D)reward to systematic risk

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, rent for manufacturing facilities, and salaries of supervisory staff.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Raw Materials Inventory

The stock of unprocessed materials that are used in manufacturing to produce goods, representing a current asset on the balance sheet.

Materials Requisitioned

The process and documentation involved in requesting and withdrawing materials from the inventory for use in production.