Which of the Following Statements Holds True for Cost of Capital

question 42

Multiple Choice

Which of the following statements holds true for cost of capital?

• A)It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development.
• B)It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future.
• C)It refers to a process that lets the customer buying the goods or services defer payment on the good or services for a specified period of time, typically thirty or ninety days.
• D)It refers to a set of procedures used to estimate the economic value of an owner's interest in a business.
• E)It refers to the rate of return that a company could earn if it chose a different investment of equivalent risk.

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Definitions:

Intimacy

The closeness between individuals in personal relationships, characterized by mutual affection, emotional connection, and trust.

Cognitive-Dissonance Theory

The view that we are motivated to make our cognitions or beliefs consistent with each other and with our behavior.

Effort Justification

In cognitive-dissonance theory, the tendency to seek justification (acceptable reasons) for strenuous efforts.

Self-Serving Bias

The tendency to view one’s successes as stemming from internal factors and one’s failures as stemming from external factors.