A Composite of the Cost of Various Sources of Funds

question 37

Multiple Choice

A composite of the cost of various sources of funds comprising a firm's capital structure is its:

• A) Internal rate of return (IRR).
• B) Weighted-average cost of capital (WACC).
• C) Book (accounting) rate of return.
• D) Modified internal rate of return (MIRR).
• E) Accounting rate of return (ARR), after tax.

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Definitions:

Indemnify

To compensate for harm or loss; in legal contexts, often involves a party agreeing to bear any losses or damages incurred by another party.

Third-party Claims

Third-party claims involve demands for compensation or legal action brought by someone who is not a direct party to a contract, usually in liability or insurance cases.

Insurance

A contract by which an insurance company, the insurer, promises to pay a sum of money or give something of value to another, either the insured or the beneficiary, to compensate for a specified loss.

Concurrent Property Ownership

Ownership of property by two or more parties at the same time, where each party has an undivided interest in the whole property.