A company has made the decision to finance next year’s capital projects through debt rather than additional equity. The benchmark cost of capital for these projects should be _________. The before-tax cost of new-debt financing. The after-tax cost of debt financing. The cost of equity financing. The weighted-average cost of capital.
A company has made the decision to finance next year’s capital projects through debt rather than additional equity. The benchmark cost of capital for these projects should be _________. The before-tax cost of new-debt financing. The after-tax cost of debt financing. The cost of equity financing. The weighted-average cost of capital.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company has made the decision to finance next year’s capital projects through debt rather than additional equity. The benchmark cost of capital for these projects should be _________.
The before-tax cost of new-debt financing.
The after-tax cost of debt financing.
The cost of equity financing.
The weighted-average cost of capital.
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