Which of the following is NOT 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.

Question

Quizplus · Accepted Answer

Accounts payable is not a capital component. Capital components are sources of funding that require a long-term commitment of resources, such as long-term debt, retained earnings, common stock, or preferred stock. Accounts payable are short-term obligations owed to suppliers for goods or services purchased on credit and are not a long-term source of capital.

Which of the Following Is NOT a Capital Component When