Which One of the Following Primarily Determines the Cost of Capital

question 265

Multiple Choice

Which one of the following primarily determines the cost of capital for a project?

• A) Current debt-equity ratio of the firm.
• B) Firm's WACC.
• C) Manner in which the funds will be utilized.
• D) Source of the funds for the project.
• E) expected internal rate of return on the project

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Definitions:

Credibility

The quality of being trusted and believed in, often resulting from a demonstrated record of reliability and integrity.

Reciprocity

Reciprocity is a social norm that involves mutual exchange, where actions or benefits provided by one party are returned by another.

ACE Model

A conceptual framework focusing on Awareness, Commitment, and Execution, used in various contexts to improve performance and outcomes.

Effectiveness

The degree to which objectives are achieved, reflecting the capability of producing a desired result.