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:

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to increase liquidity.

Reverse Split

A corporate action in which a company decreases the number of its outstanding shares to increase the share price.

Total Market Value

The aggregate valuation of a company or asset in the marketplace, based on current share price and the total number of outstanding shares.

Reasonable Level

A term often used in finance and economics to describe an equilibrium or average measure that is considered acceptable under given conditions.