The Weighted Average Cost of Capital (WACC) Includes

question 17

Multiple Choice

The weighted average cost of capital (WACC) includes

• A) the required return on equity and required return on underlying firm assets.
• B) the cost of any long-term debt and the cost of equity.
• C) the cost of any long-term debt and required return on underlying firm assets.
• D) None of the above.

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories.

DSO

Days Sales Outstanding, a financial metric that measures the average number of days that a company takes to collect payment after making a sale.

Seasonal Sales

Sales that fluctuate during certain times of the year due to seasonal factors, such as holidays or weather changes.

Accounts Receivable

Funds that customers have yet to pay to a company for products or services that have already been provided or consumed.