Division estimated cash flows in capital budgeting

Assignment Help Financial Management

Reference no: EM131825793

1. Multidivisional companies with diverse operations should use an interest rate for discounting a specific division's estimated cash flows in capital budgeting that is representative of:

a. the riskiness of the specific division's cash flows.

b. the cost of capital obtained through the application of the pure play method.

c. Either b or c

d. the entire firm's cost of capital

2. When a similar company can't be found to use in estimating a divisional beta, the division's own records can sometimes be used instead. This method is called:

a. financial accounting.

b. pure play.

c. CAPM.

d. accounting beta

Reference no: EM131825793

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