What Is the Purpose of a Profit-Sharing Plan

question 51

Multiple Choice

What is the purpose of a profit-sharing plan?

• A)to allow workers to contribute ideas and suggestions
• B)to motivate a total commitment to the organization as a whole
• C)to enable workers to share in labour cost savings
• D)to instil commitment to the employee's immediate work group

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Definitions:

WACC

stands for Weighted Average Cost of Capital, which is a calculation of a firm's capital cost from all sources, including equity and debt, weighted accordingly.

Capital Asset Pricing Model

A model used to determine the theoretical rate of return of an asset, considering risk and the time value of money.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertook by investing their capital.

WACC

Weighted Average Cost of Capital, a calculation that reflects the cost of a company to finance its assets through a mix of equity and debt.