Question

Ted is trying to decide what cost of capital he should assign to a project. Which one of the following should be his primary consideration in this decision? a. Amount of debt used to finance the project Use b. or lack thereof c. of preferred stock to finance the project Mix of funds used to finance the project Risk level of the project Length of the project's life

Answer 1

Answer:

Risk level of the project

Explanation:

The cost of capital signifies the total cost incurred in the manufacture of any commodity. It is the cost made primarily to make a good return out of it. The cost of capital is one of the significant parts of the business. The value of the cost of capital is estimated by the market. It symbolizes the risk which the investor has taken in building the capital. In case when an investor is granted to choose among the two different investments who posses the same risk, the investors are intended to choose the one which would provide them with a high return.