true or false? 1.capital is money that is loaned to or invested in a business. t
ID: 2727622 • Letter: T
Question
true or false?
1.capital is money that is loaned to or invested in a business.
true or false?
2.the weighted average cost of capital wacc takes into account the mix of dept and equity financing and the tax effect
true or false?
3.individuals insurance companies and pension funds are all good sources of equity.
true or false?
4.the anortization rate is the number of years on which the dept service payment calculation is based
true or false?
5.growth through diversification increases a companys risk because they are spreading out over several markets.
true or false
Explanation / Answer
1. Capital is money that is loaned to or invested in a business.
Yes, the amount which is invested will be treated capital. Capital is a initial investment to set up and run the business. It may be from loan taken or investment of own amount.
Therefore, given statement is “True”.
2. The weighted average cost of capital WACC takes into account the mix of debt and equity financing and the tax effect
To compute the weighted average cost of capital we need to consider the weights of debt and equity and also considers the tax effect while calculating cost of debt.
Therefore, given statement is “True”.
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