The cost of capital used in capital budgeting should reflect the average cost of the various sources of long-term funds a firm uses to acquire assets.

Question

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The cost of capital used in capital budgeting should reflect the weighted average cost of the various sources of long-term funds a firm uses to acquire assets, which takes into account the proportion of each source in the firm's capital structure and the respective cost of capital of each source.

The Cost of Capital Used in Capital Budgeting Should Reflect