Question

Which of the following is a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting?
a. Long-term debt.
b. Accounts payable.
c. Retained earnings.
d. Common stock.
e. Preferred stock.

Answer 1

Answer: B. Accounts payable.

Explanation:

I think your question isn't well written, I believe it should be "Which of the following is not a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting"?

The capital component when calculating the weighted average cost of capital for use in capital budgeting include the long-term debt, retained earnings, common stock and the preferred stock.

It should be noted that the account isn't among the options as it does not provide flow of capital.