Q906
Average rate of return which is required by all investors of company is classified as
A.
extrinsic cost of capital
B.
weighted average cost of capital
AnswerC.
mean cost of capital
D.
standard cost of cash
Answer: Option B
Solution
Answer: Option B
Solution:
Average rate of return which is required by all investors of company is classified as weighted average cost of capital. The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All sources of capital, including common stock, preferred stock, bonds, and any other long-term debt, are included in a WACC calculation.