[amp_mcq option1=”All sources” option2=”All borrowings” option3=”Share capital” option4=”Share Bonds & Debentures” correct=”option1″]<\/p>\n
The correct answer is: A. All sources.<\/p>\n
The firm’s cost of capital is the average rate of return that a company must earn on its investments in order to satisfy its investors. It is a weighted average of the costs of debt, equity, and preferred stock.<\/p>\n
Debt is a source of capital that a company borrows from lenders. The cost of debt is the interest rate that the company pays on its loans.<\/p>\n
Equity is a source of capital that a company raises by selling shares of stock to investors. The cost of equity is the rate of return that investors expect to earn on their investment in the company’s stock.<\/p>\n
Preferred stock is a type of equity that has a fixed dividend rate. The cost of preferred stock is the dividend rate that the company pays on its preferred stock.<\/p>\n
The firm’s cost of capital is used to calculate the company’s weighted average cost of capital (WACC), which is a measure of the company’s overall cost of capital. The WACC is used to make investment decisions, such as whether to invest in a new project or to expand an existing one.<\/p>\n
Option B is incorrect because it only includes borrowings. Option C is incorrect because it only includes share capital. Option D is incorrect because it only includes share bonds and debentures.<\/p>\n","protected":false},"excerpt":{"rendered":"
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