Only Long-Term Debt Should Be Used to Compute the Component

question 67

True/False

Only long-term debt should be used to compute the component cost of debt used in the WACC.

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Definitions:

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to make required payments.

Secures

Generally refers to providing protection or ensuring the enforcement of a legal agreement, often involving financial assets as collateral.

Ordinary Course

Actions and transactions that are considered normal or routine within the scope of a business's operations or an individual's usual undertakings.

UCC

The Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.