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I am having trouble finding the right answers to these questions Which of these statements is true regarding divisional WACC? Using a simple firmwide WACC
I am having trouble finding the right answers to these questions
Which of these statements is true regarding divisional WACC? Using a simple firmwide WACC to evaluate new projects would give an unfair advantage to projects that present less risk than the firm's average beta. Using a firmwide WACC to evaluate new projects would have no impact on projects that present less risk than the firm's average beta. Using a divisional WACC versus a WACC for the firm's current operations will result in quite a few incorrect decisions. Using a simple firmwide WACC to evaluate new projects would give an unfair advantage to projects that present more risk than the firm's average beta. We commonly measure the risk-return relationship using which of the following? Correlation coefficient Coefficient of variation Expected returns Standard deviation Will's Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the end of 2013. If the firm's total debt at year-end was $5 million, how much equity does Will's Wheels have? $7.69 million $3.25 million $5 million $0.65 million When firms use multiple sources of capital, they need to calculate the appropriate discount rate for valuing their firm's cash flows as__________. a sum of the capital components costs a simple average of the capital components costs they apply to each asset as they are purchased with their respective forms of debt or equity a weighted average of the capital components costs As new capital budgeting projects arise, we must estimate__________. the cost of the stock being sold for the specific project the float costs for financing the project the cost of the loan for the specific project when such projects will require cash flows What are reasons for the firm to go abroad? All of the above Access to raw materials Diversification Lower production cost Which of these provide a forum in which demanders of funds raise funds by issuing new financial instruments, such as stocks and bonds? Secondary markets Investment banks Money markets Primary markets What are the tools available for the manager in financial planning? Reducing collection period and delaying disbursement of cash Increasing inventory turnover and reducing collection period Delaying disbursement of cash and cash management Delaying disbursement of cash, reducing collection period, cash management, and Increasing inventory turnover You are trying to pick the least-expensive machine for your company. You have two choices: machine A, which will cost $50,000 to purchase and which will have OCF of -$3,500 annually throughout the machine's expected life of three years; and machine B, which will cost $75,000 to purchase and which will have OCF of -$4,900 annually throughout that machine's four-year life. Both machines will be worthless at the end of their life. If you intend to replace whichever type of machine you choose with the same thing when its life runs out, again and again out into the foreseeable future, and if your business has a cost of capital of 14 percent, which one should you choose? Machine B Neither machine A nor B Machine A Both machines A and B fStep by Step Solution
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