Q504
In capital budgeting, cost of capital is used as discount rate and is based on pre-determines
A.
cost of inflation
B.
cost of debt and equity
AnswerC.
cost of opportunity
D.
cost of transaction
Answer: Option B
Solution
Answer: Option B
Solution:
In capital budgeting, cost of capital is used as discount rate and is based on pre-determines cost of debt and equity. Cost of debt refers to the effective rate a company pays on its current debt. The cost of equity is the return a company requires to decide if an investment meets capital return requirements.