A firm uses its weighted average cost of capital to evaluate the proposed projects for all of its varying divisions. By doing so, the firm:.
a. maintains the current risk level and capital structure of the firm.
b. encourages the division managers to recommend only their most conservative projects.
c. automatically gives preferential treatment in the allocation of funds to its riskiest division.
d. allocates capital funds evenly among its divisions.
e. automatically maximizes the total value created for its shareholders.
Answers: 2
Business, 22.06.2019 11:20, greatsavagebeast
Mae jong corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of $2 par value ordinary shares. the market rate of interest on similar bonds is 12%. interest is payable annually on december 31, and the bonds were issued for total proceeds of $1,000,000. in accounting for these bonds, mae jong corp. will: (a) first assign a value to the equity component, then determine the liability component. (b) assign no value to the equity component since the conversion privilege is not separable from the bond.(c) first assign a value to the liability component based on the face amount of the bond.(d) use the “with-and-without” method to value the compound instrument.
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Business, 23.06.2019 00:30, KittyGotham
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