Which of the following is the preference method in estimating a firm's cost of capital?
A) Consider the cost of a specific source of financing that will be used for a firm's new projects, i.e.the marginal cost of capital.
B) Calculate the weighted average cost of new capital to be utilized in financing a firm's projects.
C) Calculate the firm's weighted average CAPM to be utilized in financing a firm's projects.
D) Calculate the firm's cost of capital using the historical cost of components.
Correct Answer:
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