The Weighted Average Cost of Capital That Is Used to Evaluate

question 102

Multiple Choice

The weighted average cost of capital that is used to evaluate a specific project should be based on the

• A)mix of capital components that was used to finance a project from last year.
• B)overall capital structure of the corporation.
• C)cost of capital for other corporations with similar investments.
• D)mix of capital components for all capital acquired in the most recent fiscal year.

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Definitions:

Total Utility

The total satisfaction or benefit received from consuming a particular quantity of goods or services.

Risk Preferences

Individuals' or entities' varying tolerance for risk, influencing their decision-making in uncertain situations.

Utility

A measure of satisfaction or happiness that a consumer gains from consuming a good or service.

Income

The financial gain received by an individual or business, typically in the form of wages, salaries, or profits, for providing labor or capital or through investing.