Question

The weighted average cost of capital is​ ________. A. the cost of capital for the firm as a whole B. made up of three financing​ components: the cost of​ debt, the cost of preferred​ stock, and the cost of equity C. the average of the cost of each financing​ component, weighted by the proportion of each component D. All of the above

Answer 1

Answer:

The answer is D. All of the above

Explanation:

The Capital structure of most companies comprise equity, debt and/or preference shares. All these that made up capital structure has cost or let's say return. We have cost of capital, cost of debt, cost of preference shares.

Therefore, weighted average cost of capital is average of the cost of each financing​ component(cost of capital, cost of debt and cost of preference shares), weighted by the proportion of each component

All the options relates to the weighted average cost of capital(WACC).