Which of the Following Is Not Considered a Capital Component

question 39

Multiple Choice

Which of the following is not considered a capital component for the purpose of calculating the weighted average cost of capital as it applies to capital budgeting?

• A) Long-term debt.
• B) Common stock.
• C) Accounts payable.
• D) Preferred stock.
• E) All of the above are considered capital components for WACC and capital budgeting purposes.

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Definitions:

Bretton Woods Agreement

An agreement established in 1944 which set up an international monetary system based on fixed exchange rates and established the International Monetary Fund (IMF) and the World Bank.

Net Indebtedness

The total amount of borrowed money minus assets or reserves, indicating a person's, company's, or country's financial obligations.

Factor Payments

Payments made to the factors of production, such as wages to labor, rent to landowners, interest to capital, and profits to entrepreneurs.

International Currency Markets

Global platforms for exchanging one country's currency for another's, influencing foreign exchange rates and international trade.