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 depends primarily on the degree of risk for the new product. The higher the risk, the higher the cost of capital will be. Other factors, such as the form of financing and the firm's existing debt and equity, can also influence the cost of capital, but they are not as significant as the level of risk associated with the new product. Therefore, choice D is the best answer.

A Firm Is Considering Manufacturing a New Product Line