Weights used in the computation of project flotation costs

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Reference no: EM132046070

1. The weights used in the computation of a project's flotation costs should be based on the:

A. market values of the company's outstanding debt and equity.

B. current book value of the company's debt and equity.

C. company's historical debt-to-equity ratio.

D. the company's target debt-to-equity ratio.

E. project's actual sources of funding.

2. How does the valuation of a company vary from the valuation of a project using WACC?

A. Book values are used as the weights for WACC when valuing a company.

B. Debt and equity weights are set equal for WACC when valuing a company.

C. A terminal value is included in the valuation process for a company but generally not for a project.

D. Debt is not adjusted for taxes when computing the WACC for a company valuation.

E. The WACC must be set equal to RM when valuing a company.

Reference no: EM132046070

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