The Mixture of Financing Sources Used by a Firm Will

question 29

True/False

The mixture of financing sources used by a firm will vary from year to year,so many firms use target capital structure proportions when calculating the firm's weighted average cost of capital.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, reported on the income statement as part of operating expenses if related to core operations, or as non-operating expenses if it is not.

Bonds Outstanding Method

A technique used to calculate the total amount of bonds that are currently issued and not yet redeemed or paid off by the issuer.

Note Receivable

A written promise for amounts to be received by a business, typically including interest, from another party.

Impaired Value

The condition in which the market value of an asset is less than its carrying value on the balance sheet.