Q445
Rate of required return by debt holders is used for estimation the
A.
cost of debt
AnswerB.
cost of equity
C.
cost of internal capital
D.
cost of reserve assets
Answer: Option A
Solution
Answer: Option A
Solution:
Rate of required return by debt holders is used for estimation the cost of debt. Cost of debt refers to the effective rate a company pays on its current debt. In most cases, this phrase refers to after-tax cost of debt, but it also means the company's cost of debt before taking taxes into account.