Which of the Following Is Not Considered a Capital Component

question 45

Multiple Choice

Which of the following is not considered a capital component for the purpose of calculating the weighted average cost of capital as it applies to capital budgeting?

• A) Long-term debt.
• B) Ordinary shares.
• C) Short-term debt.
• D) Preference shares.
• E) All of the above are considered capital components for WACC and capital budgeting purposes.

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Definitions:

Margin Of Error

The ± value added to and subtracted from a point estimate in order to develop an interval estimate of a population parameter.

Confidence

The degree to which one can feel assured or certain about an inference or prediction, often expressed as a percentage.

Null Hypothesis

A default hypothesis that there is no effect or no difference, and it is subjected to a test to determine the likelihood of its accuracy.

P-Value

The probability that the observed results happened by chance if the null hypothesis of a study is true.