m/af/servliet/quiz2quiz action takeQuiz&equiz; probGuid.... ???11 Based on your

Question

m/af/servliet/quiz2quiz action takeQuiz&equiz; probGuid.... ???11 Based on your understanding of the concept of cost of capital, which of the following statements are valid? check all that apply Companies often finance their new projects with capital that comes from retained earnings. This also constitutes investor-supplied capital. Companies are financed by several sources of investor-supplied capital, which are called capital components Preferred stock is not taken into account when considering the costs related to investor-supplied capital short-term debt such as accounts payable or short-term loans are not considered capital components s: one is very risky, and the other exhibits significantly less risk. The e of return to evaluate its investment projects. It is most likely that ecrease ease ase crease Session Timeout 59:33 quity will continuously change throughout the day, b

Explanation / Answer

Ans 1 statement 1and 2 are correct . Company uses retained earnings as it's part of equity.

Statement 2 tells the basic difinition of capital which is correct.

Ans 2 Statement 2 and 4 are correct. Riskiness is imverslin proportional to value of the firm

Ans 3 statements 2and 3 are correct. With higher tax rate, higher interest shield and thus lower cost of debt which makes lower wacc.

To lower it's it's of debt , lowering the copoun rate is the solution.

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