The "Pure Play" Approach to Estimating a Divisions WACC Involves

question 56

Multiple Choice

The "pure play" approach to estimating a divisions 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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Definitions:

Coping

The strategies or mechanisms individuals use to manage stress, adversity, or emotional distress.

Experimental Group

The subjects in an experiment who receive some special treatment in regard to the independent variable.

Dependent Variable

The variable in an experiment that is observed and expected to change as a result of manipulations in the independent variable.

Independent Variable

In scientific research, the variable that is manipulated or changed by the researcher to observe its effects on the dependent variable.