The Cost of Capital

question 109

Multiple Choice

The cost of capital

• A) measures the riskiness of a project or firm.
• B) depends on the type of assets being invested in.
• C) provides a hurdle for management in making capital budgeting decisions.
• D) all of the above

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Definitions:

Cost Per Unit

The total cost incurred in producing, manufacturing, or acquiring a single unit of a specific good or service.

Profit Maximization

The approach a business takes to determine the pricing and output that lead to the utmost profit.

Production Function

Describes the technological relationship between the quantity of inputs used and the quantity of output produced.

Production Function

An equation that describes the maximum amount of output that can be produced with a given set of inputs.