The Cost of Capital

question 31

Multiple Choice

The cost of capital:

• A) will decrease as the risk level of a firm increases.
• B) is primarily dependent on the source of the funds used in a project.
• C) implies that a project will produce a positive net present value only when the rate of return on the project is less than the cost of capital.
• D) remains constant for all projects sponsored by the same firm.
• E) depends on how the funds are going to be utilized.