________ is the average rate of interest a firm pays on its combination of debt and equity.
A) Economic surplus
B) Marginal cost
C) Working capital
D) Cost of capital
E) Economic deficit

Question

Quizplus · Accepted Answer

A)A company's cost of capital is the average rate of interest it must pay on its debt and equity financing. For any form of financing to make economic sense, the expected returns must exceed the cost of capital.
B)A company's cost of capital is the average rate of interest it must pay on its debt and equity financing. For any form of financing to make economic sense, the expected returns must exceed the cost of capital.
C)A company's cost of capital is the average rate of interest it must pay on its debt and equity financing. For any form of financing to make economic sense, the expected returns must exceed the cost of capital.
D)A company's cost of capital is the average rate of interest it must pay on its debt and equity financing. For any form of financing to make economic sense, the expected returns must exceed the cost of capital.
E)A company's cost of capital is the average rate of interest it must pay on its debt and equity financing. For any form of financing to make economic sense, the expected returns must exceed the cost of capital.

________ Is the Average Rate of Interest a Firm Pays