When Firms Use Multiple Sources of Capital, They Need to Calculate

question 27

Multiple Choice

When firms use multiple sources of capital, they need to calculate the appropriate discount rate for valuing their firm's cash flows as

• A) a simple average of the capital components costs.
• B) a sum of the capital components costs.
• C) a weighted average of the capital components costs.
• D) they apply to each asset as they are purchased with their respective forms of debt or equity.

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Definitions:

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