In general, firms should use their weighted average cost of capital (WACC) to evaluate capital budgeting projects because most projects are funded with general corporate funds, which come from a variety of sources. However, if the firm plans to use only debt or only equity to fund a particular project, it should use the after-tax cost of that specific type of capital to evaluate that project.

Answer the following statement true (T) or false (F)


False

Rationale: In general, this statement is false, because the firm should be viewed as an ongoing entity, and using debt (or equity) to fund a given project will change the capital structure, and this factor should be recognized by basing the cost of capital for all projects on a target capital structure. Under some special circumstances, where a project is set up as a separate entity, then "project financing" may be used, and only the project's specific situation is considered. This is a specific situation, however, and not the "in general" case.

Business

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The Children's Online Privacy Protection Act prohibits Internet operators from collecting information from children under what age without parental permission?

a. 18 b. 16 c. 13 d. 10

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Congress enacts a law prohibiting toys made in China from being sold in the United States. The Hawaii state legislature enacts a law allowing the sale of Chinese-made toys. Hawaii's law will most likely be struck down under

a. the commerce clause. b. the equal protection clause. c. the due process power. d. the supremacy clause.

Business

An employer's interference with the employee's right to bargain collectively is not an unfair labor practice

Indicate whether the statement is true or false

Business

Time value of money calculations, such as present and future value amounts, can be applied to many day-to-day decisions

Indicate whether the statement is true or false.

Business