Which of the following will impact the cost of equity component in the weighted average cost of capital?
A) The risk-free rate
B) Beta
C) Expected return on the market
D) All of the above

Question

Quizplus · Accepted Answer

All three factors - risk-free rate, beta, and expected return on the market - impact the cost of equity component in the weighted average cost of capital. A higher risk-free rate increases the cost of equity, while a higher beta (reflecting higher market risk) and a higher expected return on the market increase the cost of equity. Therefore, all three options affect the cost of equity and the correct answer is D.

Which of the Following Will Impact the Cost of Equity