In order to recognize the interrelationship between financing and investments, the firm should use__________when evaluating an investment.
A) the current opportunity cost
B) the least costly source of financing
C) the most costly source of financing
D) the weighted average cost of all financing sources

Question

Quizplus · Accepted Answer

The firm should use the weighted average cost of all financing sources when evaluating an investment as it considers the cost of all sources of financing used by the firm, taking into account the proportion of each source in the overall capital structure. This provides a more accurate picture of the true cost of financing the investment and allows for better decision-making regarding whether or not to proceed with the investment.

In Order to Recognize the Interrelationship Between Financing and Investments