Bloom and Co

question 50

Multiple Choice

Bloom and Co.has no debt or preferred stock¾it uses only equity capital, and has two equally-sized divisions.Division X's cost of capital is 10.0%, Division Y's cost is 14.0%, and the corporate (composite) WACC is 12.0%.All of Division X's projects are equally risky, as are all of Division Y's projects.However, the projects of Division X are less risky than those of Division Y.Which of the following projects should the firm accept?

• A) A Division Y project with a 12% return.
• B) A Division X project with an 11% return.
• C) A Division X project with a 9% return.
• D) A Division Y project with an 11% return.
• E) A Division Y project with a 13% return.

Identify the characteristics of economic resources and differentiate between them (e.g., land, labor, capital).

Understand the notion of the time-value of money and its implications for financial decisions.

Examine the effects of changes in supply and demand on interests and rents.

Understand the concept of economic profit versus salaries and its significance in business.

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Definitions:

AIDA

An acronym that stands for Attention, Interest, Desire, and Action, describing stages of consumer engagement and marketing effectiveness.

Interest

The feeling of wanting to know or learn about something or someone.

Desire

A strong feeling of wanting to have something or wishing for something to happen.

Workplace Change

Modifications or transformations within the work environment, potentially affecting processes, policies, or staff.