In managerial accounting,what is the cost of capital?
A)the amount a firm could earn on its assets by putting them to their best alternative use.
B)not included in the financial accounting statements.
C)the weighted average of the costs of the firm's sources of funds taking into account both debt and equity sources of capital.
D)All of the answers are correct.

Question

Quizplus · Accepted Answer

The cost of capital encompasses all the given descriptions: it represents the opportunity cost of investing resources in one particular business instead of others (A), it is not typically reported in financial accounting statements (B), and it is calculated as the weighted average of all capital sources, including both debt and equity (C).

In Managerial Accounting,what Is the Cost of Capital