capital budgeting and cost of capital purposes, the firm should assume that each dollar of capital is obtained in accordance with its target capital structure, which for many firms means partly as debt, partly as preferred stock, and partly common equity.

Question

Quizplus · Accepted Answer

It is true that firms should assume that each dollar of capital is obtained in accordance with their target capital structure, which typically includes both debt and equity components.

Capital Budgeting and Cost of Capital Purposes, the Firm Should