Q33
The cost of capital of a long term debt is generally.
A.
Lower than the owned funds
B.
Equal to that of owned funds
C.
More or less than owned funds
D.
Higher than that of owned funds
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
The cost of capital of a long term debt is generally Higher than that of owned funds. Cost of capital refers to the opportunity cost of making a specific investment. It is the rate of return that could have been earned by putting the same money into a different investment with equal risk.