The Weighted Average of the fiRm's Costs of Equity, Preference

question 1

Multiple Choice

The weighted average of the firm's costs of equity, preference shares, and after tax debt is the:

• A)reward to risk ratio for the firm.
• B)expected capital gains yield for the equity.
• C)expected capital gains yield for the firm.
• D)portfolio beta for the firm.
• E)weighted average cost of capital (WACC).

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Definitions:

Direct Labor

The labor costs of workers who are directly involved in the production of goods or services.

Indirect Labor

Labor costs not directly tied to the production of goods or services, such as maintenance staff and supervisors.

Work in Process

Goods partially completed in manufacturing, not yet ready for sale.

Raw Materials

The basic materials from which a product is made, used in the early stages of the production process.