A Composite of the Cost of Various Sources of Funds

question 122

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

---

Definitions:

Prepaid Insurance

An asset account representing the advance payment for insurance coverage, which will be expensed over the period of coverage.

Insurance Premiums

Payments made to an insurance company in exchange for coverage, which can be paid monthly, quarterly, or annually.

Insurance Expense

The cost reported by a company for premiums it pays on its insurance policies, covering risks such as property damage, theft, or liability.

Accumulated Depreciation

The total amount of depreciation expense that has been charged against a fixed asset since it was put into use, representing the wear and tear over time.