The cost of capital:
A) is lower for a start-up company since it is untested.
B) can be obtained from the financial statements.
C) is the same for all companies.
D) is higher for a start-up company since it is untested.

Question

Quizplus · Accepted Answer

The cost of capital is the expected return that investors want for providing capital to a company. A start-up company is considered riskier and therefore its cost of capital is higher than an established company.

The Cost of Capital