Growth does lead to increases in the firm's value,but only if the ________ exceeds the WACC does the firm's value increase by more than the amount of the investment.

Question

Quizplus · Accepted Answer

The correct answer is A) return on investment. The firm's value increases by more than the amount of the investment only if the return on investment (ROI) exceeds the Weighted Average Cost of Capital (WACC). This is because the ROI measures the efficiency and profitability of an investment, and if it is higher than the WACC, it indicates that the firm is generating returns at a rate higher than its cost of capital, thereby increasing the firm's value.

Growth Does Lead to Increases in the Firm's Value,but Only