Which of the Following Is NOT a Capital Component When

question 76

Multiple Choice

Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting?

• A) Long-term debt.
• B) Accounts payable.
• C) Retained earnings.
• D) Common stock.
• E) Preferred stock.

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Definitions:

Traceable Fixed Expense

A fixed cost that can be directly associated with a specific business segment or department.

Price Reduction

A decrease in the selling price of goods or services, typically to attract customers or boost sales.

Traceable Fixed Expense

Costs that are constant and can be directly attributed to a particular department, project, or business segment.

Net Operating Income

The total profit of a company after operating expenses are subtracted from operating revenues, excluding taxes and interest.