The weighted average cost of capital approach to decision making is not directly affected by the

Question

Quizplus · Accepted Answer

The current capital budget does not directly affect the weighted average cost of capital approach to decision making as it is a method used to determine the minimum return required by investors based on the project's risk. The cost of debt outstanding and the proposed mix of debt, equity, and existing funds used to implement the project directly affect the weighted average cost of capital calculation. The value of the common stock indirectly affects the calculation.

The Weighted Average Cost of Capital Approach to Decision Making