Different Divisions with Differing Lines of Business Use Different Costs

question 89

Multiple Choice

Different divisions with differing lines of business use different costs of capital because their cost of equity is different and also because the ________ could be different.

• A)optimal asset mix
• B)optimal volatility
• C)optimal current ratio
• D)optimal debt-equity ratio

Recognize the significance of reaching new markets and users through market modification.

Understand how creating new use situations contributes to market modification.

Identify examples of reducing product features or quality (downsizing) within product strategy.

Understand the impact of consumer perception on product positioning and repositioning strategies.

---

Definitions:

Plant Capacity

The maximum output that a manufacturing facility can produce under normal working conditions.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, which allocates an equal amount of depreciation each year over the asset's useful life.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Salvage Value

Projected value of an asset for resale once it has concluded its period of effective use.