Understanding of the concept of cost capital

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Reference no: EM13846967

Based on your understanding of the concept of cost capital, which of the following statements are valid? Check all that apply.

A. Companies incorporate the required rate of return in the cost of capital to compensate investors for the components' risk.

B. Companies always use the weighted average cost of capital (WACC) as the discount rate to analyze the financial viability of projects.

C. Investors care about the incremental value addition that new projects are making; they are least concerned with the discount rates that the company uses.

D. A company's estimate of cost of capital impacts its application in the analysis of new investments that, consequently, affects the value of the firm and the shareholders' wealth.

Reference no: EM13846967

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