Practice mode Finance

Capital budgeting decisions are evaluated using a weighted average. Which figure is used for this purpose?

Correct answer D. Cost of capital is used

Explanation

Projects are discounted at the weighted average cost of capital, which blends the costs of debt, preferred stock and equity according to the firm's target capital structure.

Report a problem

Answer checked How we write and check questions

Tip: press A, B, C or D to answer, and N for the next question.

Advertisement

Have a question about this answer?

Your email address will not be published. Required fields are marked *

Links and website addresses are not allowed in comments.