Question

For a capital budgeting project, the cost of capital associated with the project is related to ___________. Group of answer choices the total risk of the firm’s equity the type of security to be issued to finance the project the type of assets needed for the project, that is, whether they are long-term or short-term assets the risk associated with the project the interest rate on the firm's existing long term bonds

Answer 1

Answer:-  The type of security to be issued to finance the project

( Explanation- The cost of capital will depend on the type of security to be issued to finance the project. For example, if it is financed by entirely by equity then cost of equity will be the cost of capital, if it is financed entirely by bonds or loans then cost of debt will be the cost of capital and when both equity and debt are used to finance the project then Weighted Average Cost of Capital is taken as cost of capital.)