Which of the Following Is the Best Reason to Use

question 19

Multiple Choice

Which of the following is the best reason to use divisional costs of capital rather than try to measure the risk of a specific project or use the firm's overall WACC?

• A)Divisions usually have the same level of risk as the overall firm.
• B)Divisional costs of capital are usually easy to estimate.
• C)Pure play comparison firms are usually easy to find.
• D)Many divisions have different risk characteristics.

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Definitions:

Yerkes-Dodson Law

A hypothesis that proposes there's a peak arousal level for optimal performance, indicating that performance can be adversely affected by either too low or too high levels of arousal.

Physiological Arousal

A state of heightened physical and psychological activity, including increased heart rate, alertness, and readiness for action.

High School Play

A theatrical performance produced and performed by students in a high school setting.

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that describes a five-tier model of human needs, from basic physiological needs to self-actualization.