Which of the Following Is NOT a Capital Component When

question 13

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) Accounts payable.
• B) Common stock "raised" by reinvesting earnings.
• C) Common stock raised by new issues.
• D) Preferred stock.
• E) Long-term debt.

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Definitions:

Promisor

An individual or entity that makes a promise or commitment to perform a specified act or duty in a contract.

Holder in Due Course

This is a legal term for an individual or entity that has acquired a negotiable instrument in good faith and for value, thus having certain protections against defenses and claims in disputes over its payment.

Conflicting Claim

A situation where two or more parties assert rights or entitlements that are incompatible with one another.

Instrument

A formal written legal document, such as a contract, will, or deed, that formally records the details of a transaction or agreement.