Calculating the weighted average cost of capital

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Reference no: EM131825823

1. What are some of the practical reasons for capital rationing?

2. The proportions of debt and equity used in calculating the weighted average cost of capital (WACC) should be based on the current ____ weights of the individual components.

a. replacement value

b. a and b

c. book value

d. market value

2. A firm's cost of capital is:

a. the time value of money calculated on the capital owned by a business.

b. the average return it pays to investors for the use of their money.

c. the cost a firm incurs while operating a business.

d. None of the above

Reference no: EM131825823

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