Use of the Marginal Cost of Capital

question 97

Multiple Choice

Use of the marginal cost of capital

• A) acknowledges that when retained earnings is used up as a source of equity the cost of capital rises as new common stock is sold to support more growth.
• B) recognizes that the return from the last dollar of funds generated should be equal to the cost of the last dollar of funds raised.
• C) both a and b are correct.
• D) none of these are correct.

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Definitions:

Target Markets

Specific groups of consumers a company aims to reach with its products, services, and marketing efforts based on various demographic, geographic, and psychographic characteristics.

Marketing Mix

A set of actions, or tactics, that a company uses to promote its brand or product in the market; traditionally comprises the 4 Ps: Product, Price, Place, and Promotion.

SWOT Analysis

A strategic planning method used to identify Strengths, Weaknesses, Opportunities, and Threats.

American Cars

Vehicles manufactured by companies based in the United States, known for their specific styles, characteristics, and historically, for emphasizing larger sizes and engine capacities.