What does WACC stand for? Multiple choice question. Working amount of corporate cash Weighted average cost of capital Working amount of corporate cost Weighted average company cost
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What does WACC stand for?
Working amount of corporate cash
Weighted average cost of capital
Working amount of corporate cost
Weighted average company cost
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- How do the managers estimate the opportunity cost of capital for a company?Which ratio measures the overall return on the firm's assets including financial leverage and taxes? Multiple Choice ____ ROA ____ ROE ____ basic earning power ____ profit marginCost of capital refers to: a. The cost of borrowing money from financial institutions b. The cost of equity investments in the stock market c. The overall cost of financing a company's operations d. The cost of producing goods and services
- What concept is critical in distinguishing an enterprise’s return on investment from return of its investment? Capital maintenance concept Current operating performance concept Comprehensive income concept Return on investment conceptWhat capital components are typically included when estimating a firm’s corporate cost of capital? Is the corporate cost of capital the same for all firms?Why do some companies use gross book value instead of net book value to measure a division’s invested capital?
- What is the primary purpose of computing the cost of capital? a. To determine the market value of the company's shares b. To assess the company's liquidity position c. To evaluate the profitability of investment projects d. To compare the company's performance with industry peersWhat advantages do MNEs, as compared to domestic enterprises, have with regards to raising capital, and are there any cost advantages to them relative to their overall capital structure?The cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
- A responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called_______. A. return on investment B. residual income C. a profit center D. a discretionary cost centerFactors that affect the cost of capital equation Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm’s control? Check all that apply. The general level of stock prices The effect of the tax rate on the cost of debt in the weighted average cost of capital equation The firm’s capital structure The impact of a firm’s cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division L is…Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm’s control? Check all that apply. Tax rate The inflation rate The firm’s dividend payout ratio The impact of a firm’s cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division L is considering a project with an expected return of 9.5%. Should Acme Manufacturing Corporation accept or reject the project? Reject the project…
