Dereks is a brick and mortar toy store the firm is

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Derek's is a brick-and-mortar toy store. The firm is considering expanding its operations to include Internet sales. Which one of the following would be the best firm to use in a pure play approach to analyzing this proposed expansion? A. Another brick-and-mortar store that also sells onlineB. A wholesale toy distributorC.A toy store that only sells onlineD. The oldest online retailer of any productE. Derek's own store
Refer to section 12.5.Bloom's: ComprehensionDifficulty: BasicLearning Objective: 12-04 Identify some of the pitfalls associated with a firm's overall cost of capital and what to do about themSection: 12.5Topic: Pure playKelly's uses the firm's weighted average cost of capital (WACC) as the required return for some of its projects. For other projects, the firms uses a rate equal to WACC plus 1 percent, while another set of projects is assigned rates equal to WACC minus some amount. Which one of the following factors should be the key factor the firm uses to determine the amount of the adjustment it will make when assigning the project a discount rate?
Refer to section 12.5.Bloom's: ComprehensionDifficulty: BasicLearning Objective: 12-04 Identify some of the pitfalls associated with a firm's overall cost of capital and what to do about themSection: 12.5Topic: Subjective approach
A firm has multiple divisions of similar nature, yet varying degrees of risk. Which one of the following would be the most appropriate, yet relatively easy, means of assigning discount rates toeach of its proposed investments?
Refer to section 12.5.Bloom's: ComprehensionDifficulty: BasicLearning Objective: 12-04 Identify some of the pitfalls associated with a firm's overall cost of capital and what to do about themSection: 12.5Topic: Subjective approachThe computation of which one of the following requires assigning every proposed investment to a particular risk class?
Refer to section 12.5Bloom's: KnowledgeDifficulty: BasicLearning Objective: 12-04 Identify some of the pitfalls associated with a firm's overall cost of capital and what to do about themSection: 12.5Topic: Subjective approach

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