Amazon is present in the IT services sector (Amazon Web Services or AWS) and the grocery sector
Fantastic news! We've Found the answer you've been seeking!
Question:
Amazon is present in the IT services sector (Amazon Web Services or AWS) and the grocery sector (Whole Foods or WF). Let's say that the CFO of Amazon is using the WACC of Amazon (WACCA) to value projects associated with AWS and WF. Assuming that the correct discount rates for projects associated with AWS and WF verify rWF < WACC_A < rAWS, using a single WACC leads to:
(A) Underinvest in AWS, overinvest in WF
(B) Overinvest in AWS, underinvest in WF
Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
Posted Date: