Which One of the Following Primarily Determines the Cost of Capital

question 92

Multiple Choice

Which one of the following primarily determines the cost of capital for a project?

• A) Current debt-equity ratio of the firm.
• B) Firm's WACC.
• C) Manner in which the funds will be utilized.
• D) Source of the funds for the project.
• E) expected internal rate of return on the project

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Definitions:

Accumulated Depreciation

This represents the total amount of depreciation expense that has been charged against a fixed asset since it was put into use.

Salvage Value

The approximate salvage worth of an asset at its lifespan's conclusion.

Freight Charges

Freight charges are the costs incurred by a company for transporting goods, merchandise, or commodities from one place to another.

Straight-Line Basis

The straight-line basis is a method of calculating depreciation and amortization, dividing the cost of an asset evenly over its useful life.