The WACC Is Used to _______ the Expected Cash Flows

question 35

Multiple Choice

The WACC is used to _______ the expected cash flows when the firm has ___________.

• A) discount; debt and equity in the capital structure.
• B) capitalize; short term financing on the balance sheet.
• C) increase; debt and equity in the capital structure.
• D) decrease; short term financing on the balance sheet.

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Definitions:

Prepaid Expense

An expense that has been paid in advance and will be recognized as an expense in a future accounting period.

Normal Balance

The side of an account, either debit or credit, where increases in the account are recorded.

Net Book Value

The value of an asset after accounting for depreciation or amortization, representing its carrying value on the balance sheet.

Adjusting Journal Entry

An accounting entry made in the books at the end of an accounting period to allocate revenues and expenses to the period in which they actually occurred.