The average cost of capital of Smile Industries is

Question

Quizplus · Accepted Answer

The average cost of capital is the weighted average of the cost of equity and the cost of debt. As the cost of equity is typically higher than the cost of debt, the average cost of capital is also likely to be higher than the cost of debt. Therefore, only option D seems realistic as it is the only one above the cost of debt. However, without additional information about the company's capital structure and costs of equity and debt, it is difficult to determine the exact average cost of capital for Smile Industries.

The Average Cost of Capital of Smile Industries Is