Poor Capital Structure Decisions Can Result in a High Cost

question 7

True/False

Poor capital structure decisions can result in a high cost of capital, thereby making some unacceptable investments acceptable.

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Definitions:

Journal Entry

A record of a transaction in a business's accounts, noting the accounts affected and the amounts.

Depreciation

The process of methodically allocating the expense of a physical asset over its functional life.

Sales Price

The amount at which goods or services are sold to customers, sometimes before discounts, taxes, or additional charges.

Equipment Cost

The total expense incurred in purchasing and preparing equipment for its intended use, including acquisition, delivery, and setup costs.