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Management · Q515

Financial Management

Graduate and Post Graduate · Management · question 515

Q515

Weighted average cost of debt, preferred stock and common equity is classified as

A.
cost of salvage
B.
cost of interest
C.
cost of taxation
D.
cost of capital
Answer

Answer: Option D

Solution

Answer: Option D
Solution:
Weighted average cost of debt, preferred stock and common equity is classified as cost of capital. Cost of capital is the required return necessary to make a capital budgeting project, such as building a new factory, worthwhile.