The cost of capital may should be estimated from the historical cost of raising debt and equity capital.

Question

Quizplus · Accepted Answer

The cost of capital should be estimated based on current market conditions, not just historical cost. The cost of debt and equity can fluctuate over time due to changes in interest rates, market conditions, and the performance of the company. Therefore, relying solely on historical cost may not provide an accurate reflection of the current cost of capital.

The Cost of Capital May Should Be Estimated from the Historical