Rate of return which is asked by investors is classified as_____________________?
Correct answer: D. Weighted average cost of capital
- A. Average cost of capital
- B. Mean cost of capital
- C. Weighted cost of capital
- D. Weighted average cost of capital
Explanation
The weighted average cost of capital combines the required returns on debt and equity according to their proportions in the firm's financing. It therefore represents the overall return expected by the firm's investors and financiers.
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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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