Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting?
A) accounts payable.
B) common stock "raised" by reinvesting earnings.
C) common stock raised by new issues.
D) preferred stock.
E) long-term debt.

Question

Quizplus · Accepted Answer

Accounts payable is not a form of capital, but rather a liability. The WACC formula only includes the cost of financing through equity (common stock and preferred stock) and debt (long-term debt).

Which of the Following Is NOT a Capital Component When