The total area under the normal distribution curve is equal to one.
Answer the following statement true (T) or false (F)
True
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When the independent variables are correlated with each other, ________ is said to exist
Fill in the blanks with correct word
Cranberry Corp. has two divisions of equal size: a computer manufacturing division and a data processing division. Its CFO believes that stand-alone data processor companies typically have a WACC of 8%, while stand-alone computer manufacturers typically have a 12% WACC. He also believes that the data processing and manufacturing divisions have the same risk as their typical peers. Consequently, he estimates that the composite, or corporate, WACC is 10%. A consultant has suggested using an 8% hurdle rate for the data processing division and a 12% hurdle rate for the manufacturing division. However, the CFO disagrees, and he has assigned a 10% WACC to all projects in both divisions. Which of the following statements is CORRECT?
A. While the decision to use just one WACC will result in its accepting more projects in the manufacturing division and fewer projects in its data processing division than if it followed the consultant's recommendation, this should not affect the firm's intrinsic value. B. The decision not to adjust for risk means, in effect, that it is favoring the data processing division. Therefore, that division is likely to become a larger part of the consolidated company over time. C. The decision not to adjust for risk means that the company will accept too many projects in the manufacturing division and too few in the data processing division. This will lead to a reduction in the firm's intrinsic value over time. D. The decision not to risk adjust means that the company will accept too many projects in the data processing business and too few projects in the manufacturing business. This will lead to a reduction in its intrinsic value over time. E. The decision not to risk adjust means that the company will accept too many projects in the manufacturing business and too few projects in the data processing business. This may affect the firm's capital structure but it will not affect its intrinsic value.
The Baldwin Locomotive Works Inc manufactures steam locomotives for North American railways. Selected financial information for Baldwin is provided in the table below
The CFO, Matthias Baldwin, wants to distribute $1B of cash by means of an extra dividend. What will the stock price be after the dividend? Baldwin Locomotive Works Inc Selected Financial Information Stock Price $62.725 Cash $1,000M Market Capitalization $9,408.75M Shares Outstanding 150M Debt $0 A) $56.06 B) $62.73 C) $68.73 D) $69.39 E) $72.26
A "fundamental change" in a corporation would be illustrated by? A)?E-prise electing new members to the board
B)?E-prise, Inc. merging with Vitta Corporation. C)?Vitta Corporation adding a new product to its product line. D)?Vitta Corporation setting the date for its annual meeting.