Question
1) (2 points) You are a financial manager at Apple, which has two divisions. One division produces phones and has an asset beta of 2.5;
1) (2 points) You are a financial manager at Apple, which has two divisions. One division produces phones and has an asset beta of 2.5; the other division produces cars and has an asset beta of 1.5. Apple finances itself with 100% equity. The companys weighted average cost of capital (WACC) is 18%.
You are evaluating a new project in the car division. You should use the companys WACC of 18% to discount the projects free cash flows. true or false? Why?
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Inside Private Equity
Authors: James M. Kocis, James C. Bachman IV, Austin M. Long III, Craig J. Nickels
1st Edition
0470421894, 978-0470421895
