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.