Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. why would a firm not use its weighted average cost

Why would a firm not use its weighted average cost of capital (WACC) to evaluate all...

70.2K

Verified Solution

Question

Finance

Why would a firm not use its weighted average cost of capital(WACC) to evaluate all proposed investments? (5m)

Hints and notes to students: dot points are acceptable.It is important to explain your answers with details or demonstrateyour understanding by applying examples. Full marks willnot be awarded to identical (100% similarity)answers from the required textbook.  

Answer & Explanation Solved by verified expert
3.8 Ratings (623 Votes)
A firm may not use its WACC to evaluate all of its proposed investments because the WACC is always a representation of the firms required rate of return whereas the proposed investment at times    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Why would a firm not use its weighted average cost of capital(WACC) to evaluate all proposed investments? (5m)Hints and notes to students: dot points are acceptable.It is important to explain your answers with details or demonstrateyour understanding by applying examples. Full marks willnot be awarded to identical (100% similarity)answers from the required textbook.  

Other questions asked by students

Q

an isolated population of cats are observed for their frequency in an allele for striped and...

Biology
Q

What is a Disease outbreak? 2. What is the most recent disease outbreak? (Clue: Pandenia)

Medical Sciences
Q

Which reaction type is each chemical reaction, Precipitation, Acid-base, or Oxidation-reduction(redox) 1. CuSO4(aq)+Ba(ClO4)2(aq)-->BaSO4(s)+Cu(ClO4)2(aq) 2. 4Mn2++5BiO-3(aq)+2OH-(aq)-->H2O(I)+4MnO-4(aq)+5Bi+(aq) 3.NH4OH(aq)+HCl(aq)-->H2O(l)+NH4Cl(aq) 4. H2C2O4+2NaOH(aq)-->H2O(l)+Na2C2O4(aq) 5. MgCl2(aq)+Pb(NO3)2(aq)-->PbCl2(s)+Mg(NO3)2 6. 4Zn(s)+NO-3(aq)+7H2O(l)-->4Zn2+(aq)+NH+4(aq)+10OH-(aq) 7. Hg2(OOCCH3)2(aq)+SrI2(aq)-->Hg2I2(s)+Sr(OOCCH3)2(aq) 8.2HCl(aq)+K2S(aq)-->H2S(g)2KCl(aq) 9. 2H3PO4(aq)+3Ca(OH)2(aq)-->3H2O(l)+Ca3(PO4)2(aq) 10. 4Fe(s)+3O2(g)-->2Fe2O3(s)

Chemistry
Q

The function f(x) = 2x - 42x + 240x + 7 has one local minimum...

Calculus
Q

Estimated total manufacturing overhead co Actual total manufacturing...

Accounting
Q

Oriole Company commenced operations on July 1. Oriole Company uses a periodic inventory system. During...

Accounting
Q

Use the information in the adjusted trial balance presented below to calculate current assets for...

Accounting
Q

The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocation...

Accounting
Q

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31...

Accounting
Q

Question 4 4 pts Queue time is a value-added activity. True O False Question 5...

Accounting
Q

The so called bonus-malus premium calculation principle is widely spread in car insurance practice. There...

Accounting
Q

Bridgeport Company discovered an error in its accounting records in 2024. Bridgeport acquired patents costing...

Accounting