Markley and Stearns Is a Multi-Divisional Firm That Uses Its

question 46

Multiple Choice

Markley and Stearns is a multi-divisional firm that uses its WACC as the discount rate for all proposed projects.Each division is in a separate line of business and each presents risks unique to those lines.Given this,a division within the firm will tend to:

• A)receive less project funding if its line of business is riskier than that of the other divisions.
• B)avoid risky projects so it can receive more project funding.
• C)become less risky over time based on the projects that are accepted.
• D)have equal probability of receiving funding as compared to the other divisions.
• E)prefer higher risk projects over lower risk projects.

---

Definitions:

Managerial Questions

Questions that are targeted towards understanding, guiding, and making decisions in the context of managing an organization or its resources.

Higher-Order Needs

Refers to the advanced levels of needs in Maslow's hierarchy, including esteem and self-actualization needs, beyond basic physiological and safety requirements.

Esteem

A psychological term describing a positive or negative attitude toward oneself; an aspect of self-respect or self-worth.

Persistence of Effort

The continual exertion of effort towards achieving a goal, despite obstacles or difficulties.