A firm is considering manufacturing a new product line.The cost of capital associated with the new product line depends on:

Question

Quizplus · Accepted Answer

The cost of capital associated with a new product line is primarily dependent on the degree of risk associated with that product. Other factors such as the form of financing, interest rate charged on existing debt, and the risk of the firm's outstanding equity may also play a role, but the primary factor is the level of risk associated with the new product.

A Firm Is Considering Manufacturing a New Product Line