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Which of the following is/are true: The cost of capital _______________________. I. is an opportunity cost...

Which of the following is/are true: The cost of capital _______________________. I. is an opportunity cost that depends on the use of the funds, not the source II. is the same thing as the required rate of return III. is the same as the WACC for projects with equal risk to the firm as a whole IV. is also known as the appropriate discount rate

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Answer #1

Cost of capital is similar to the weighted average cost of capital and which is representing for different projects with equal risk to the firm as a whole.

Cost of capital is generally representation of the different cost which are to be apportioned to different financing structure in order to arrive at a better reflection of the overall cost increased by the company.

Rest of the options are false except option (III) because they are representing wrong statement

Correct answer would be option (III).

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