Capital gain expected by stockholders and dividends are included in____________?
Correct answer: D. Cost of equity
- A. Debt rate
- B. Investment return
- C. Interest rate
- D. Cost of equity
Explanation
Cost of equity is the return shareholders require, combining expected dividends with expected capital appreciation. Debt rate and interest rate relate to borrowing rather than shareholders’ required return.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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