Question

The company cost of capital, when the firm has both debt and equity financing, is called the:

A. cost of debt.
B. cost of equity.
C.the weighted average cost of capital (WACC).
D. the return on equity (ROE).

Answer 1

the weighted average cost of capital

Step-by-step explanation:

The weighted average capital cost refers to the amount that a corporation is supposed to pay for average to all of its securities owners in order to fund its investments. The WACC is generally called the cost of capital for the business. Crucially, it is determined not by managers but by the outside sector.

In other words, WACC reflects the minimal yield a corporation is expected to receive on an established investment portfolio to appease its investors, shareholders, and other equity suppliers, or they are looking to invest else where.