For a firm that has both debt and equity in its capital structure,its financing cost can be represented by the weighted average cost of capital that is computed by:
A)weighing the pre-tax borrowing cost of the firm and the cost of equity capital, using the debt as the weight
B)weighing the after-tax borrowing cost of the firm and the cost of equity capital, using the capital structure ratio as the weight
D)b and c

Question

For a firm that has both debt and equity in its capital structure,its financing cost can be represented by the weighted average cost of capital that is computed by:
A)weighing the pre-tax borrowing cost of the firm and the cost of equity capital, using the debt as the weight 
B)weighing the after-tax borrowing cost of the firm and the cost of equity capital, using the capital structure ratio as the weight 
D)b and c

Quizplus · Accepted Answer

The Answer of For a firm that has both debt and equity in its capital structure,its financing cost can be represented by the weighted average cost of capital that is computed by:
A)weighing the pre-tax borrowing cost of the firm and the cost of equity capital, using the debt as the weight 
B)weighing the after-tax borrowing cost of the firm and the cost of equity capital, using the capital structure ratio as the weight 
D)b and c

For a Firm That Has Both Debt and Equity in Its