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The Weighted Average Cost of Capital Should Be Used on Projects

question 96

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The weighted average cost of capital should be used on projects of similar risk that are funded through:


Definitions:

Positive Externalities

Benefits that are enjoyed by a third-party or society at large as a result of an economic activity, without them directly paying for it.

Social Benefits

The advantages or positive effects that an action or policy has on society as a whole, including things like improved health, education, and welfare.

Private Benefits

The gains or advantages that accrue directly to an individual or firm from an economic transaction or activity, not affecting others not involved in the transaction.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with production or consumption of goods and services.

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