When Firms Use Multiple Sources of Capital, They Need to Calculate

question 27

Multiple Choice

When firms use multiple sources of capital, they need to calculate the appropriate discount rate for valuing their firm's cash flows as

• A) a simple average of the capital components costs.
• B) a sum of the capital components costs.
• C) a weighted average of the capital components costs.
• D) they apply to each asset as they are purchased with their respective forms of debt or equity.

---

Definitions:

Testify

To make a statement based on personal knowledge or belief, under oath in a court of law.

Main Part

The central or most important segment or component of something.

Address Block

The part of a letter that indicates to whom the letter is addressed. The address block is placed in the upper left-hand portion of the letter, above the salutation and reference line, if one is included.

Firm's Letterhead

The official stationary of a company or organization that contains its name, address, logo, and sometimes its directors, used for formal correspondence.