The cost of capital is best described as the
A)opportunity cost of financing a capital outlay.
B)funds that must be acquired to finance a capital outlay.
C)decrease in stockholder equity due to a capital outlay.
D)All of the above

Question

Quizplus · Accepted Answer

The cost of capital refers to the opportunity cost of using funds to finance a capital outlay, which is the return that could have been earned if the funds had been invested elsewhere. It is not necessarily the actual funds that must be acquired nor does it necessarily result in a decrease in stockholder equity.

The Cost of Capital Is Best Described as the