If a company invests in a project with an internal rate of return higher than th
ID: 2574062 • Letter: I
Question
If a company invests in a project with an internal rate of return higher than the company's cost of capital, the project should
A.
reduce the weighted average cost of capital.
B.
increase the market value of the company's stock.
C.
decrease the market value of the company's stock.
D.
have little or no effect on the market value of the company's stock.
Which of the following statements about a balanced scorecard is true?
A.
The balanced scorecard gives managers a perspective of the organization's performance using a recurring set of criteria.
B.
The advantage of a balanced scorecard approach is that it eliminates the need for management accounting data.
C.
The advantage of a balanced scorecard approach is that it leads management to focus exclusively on critical downstream issues such as consumer demand, and away from lesser upstream issues such as design and production.
D.
The advantage of a balanced scorecard approach is that it can best be used as a single, comprehensive measure of corporate performance.
A.
reduce the weighted average cost of capital.
B.
increase the market value of the company's stock.
C.
decrease the market value of the company's stock.
D.
have little or no effect on the market value of the company's stock.
Explanation / Answer
Answer A:
Option B is the right answer.
Explantion option by option
A. WACC Decrease or increase will depend upon what was the Cost of capital before and at what cost of capital we are borrowing now to detremine new WACC, which has not been mentioned here. So, cant draw a conclusion on Wacc from this information that it will go down or up
B. If IRR > Cost of capital. project will get accepted which in turn will increase the cash flow to the company which will lead to benefits to the shareholders, resulting in increased demand for the company shares and market value will automatically increase.
C. Option B explains it
D. In option B already expalined
Answer B.
option A is the right answer
Reason:
Balance scorecard provides a view of the Company by taking multiple criteria in to consideration that are financial and Non -financial as opposed to return on investment, EVA and residual income which are single measures of performance
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.