The Cost of Capital Is the Simple Average Rate of Return

question 87

True/False

The cost of capital is the simple average rate of return that a company must pay to its long-term creditors and the shareholders.

---

Definitions:

Apparent Authority

A situation where a person appears to have been given the power by another (such as an employer) to act on their behalf, leading others to reasonably believe they have such authority.

Gratuitously

Done without receiving any return or compensation; freely.

Principal

The original sum of money lent or invested, excluding any interest or dividends.

Authority

Authority refers to the legal power or right given to an individual or body to make decisions, enforce rules, or control something or someone.