The 'Pure Play' Approach to Estimating a Division WACC Involves

question 26

Multiple Choice

The 'pure play' approach to estimating a division WACC involves

• A)computing the value of the division if it were to be spun off as a separate company.
• B)comparisons to free standing firms with businesses similar to the division.
• C)'deleveraging' the division so that only the cost of equity is considered.
• D)using the company's WACC to estimate the value added by the division.

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