Rate of required return by debt holders is used for estimation the

The correct answer is A. cost of debt.

The cost of debt is the rate of return that a company must pay to its lenders in order to borrow money. It is calculated by taking the interest rate on the debt and adding any fees or other costs associated with the loan. The cost of debt is an important factor in a company’s financial planning, as it affects the company’s borrowing costs and its overall profitability.

The other options are incorrect because:

• The cost of equity is the rate of return that a company must earn on its equity investments in order to satisfy its shareholders. It is calculated by taking the risk-free rate of return and adding a risk premium that reflects the riskiness of the company’s investments.
• The cost of internal capital is the rate of return that a company must earn on its internal investments in order to satisfy its shareholders. It is calculated by taking the risk-free rate of return and adding a risk premium that reflects the riskiness of the company’s investments.
• The cost of reserve assets is the rate of return that a company must earn on its reserve assets in order to satisfy its shareholders. It is calculated by taking the risk-free rate of return and adding a risk premium that reflects the riskiness of the company’s reserve assets.