Explain why the divisional cost of capital approach may cause problems if new projects are assigned to the wrong division.
Answer to relevant QuestionsWhen will the subjective approach to forming divisional WACCs be better than using the firmwide WACC to evaluate all projects?PDQ, Inc. expects EBIT to be approximately $11 million per year for the foreseeable future, and that they have 25,000 20-year, 8 percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the ...FarCry Industries, a maker of telecommunications equipment, has two million shares of common stock outstanding, one million shares of preferred stock outstanding, and 10,000 bonds. If the common shares sell for $27 per ...BetterPie Industries has three million shares of common stock outstanding, two million shares of preferred stock outstanding, and 10,000 bonds. If the common shares are selling for $47 per share, the preferred shares are ...Why does a decrease in NWC result in a cash inflow to the firm?
Post your question