Which of the Following Statements Is TRUE About the Weighted

question 157

Multiple Choice

Which of the following statements is TRUE about the weighted average cost of capital (WACC) ?

• A) If a business has a high risk level, the WACC will be higher.
• B) If a business has a high risk level, the WACC will be lower.
• C) The WACC represents the corporation's internal return targets.
• D) The WACC is the same as a business's ROI.

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Definitions:

Probability

A value ranging from 0 to 1 that denotes the probability of an event's occurrence.

Winning

Achieving victory or success in a contest, conflict, or endeavor.

Monthly Rates

The amount or percentage per month used for calculating changes in financial or other measurements.

Annual Rates

Yearly percentages or quantities employed in various calculations, such as interest or growth rates.