Cost of Capital
Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present cash flow.
Capital Structure
Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.
Weighted Average Cost of Capital
The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakeholders and for its security to finance the assets. The most commonly used sources of capital include common stocks, bonds, long-term debts, etc. The increase in weighted average cost of capital is an indicator of a decrease in the valuation of a firm and an increase in its risk.
![An Investment company advertised that last year Its clients, on average, made a profit of 10%. Assuming that average
refers to the mean, which of the following clalms must be true based on this information?
Note: More than one statement could be true. If none of the statements is true, mark the appropriate box.
This year at least one of their clients will make a profit of at
least 10%.
Last year all of their clients made a profit of more than 3%.
Last year more than half of their clients made a profit of at
least 10%.
OLast year some of their clients made a profit of at least 10%.
Last year some of their clients made a profit of exactly 10%.
None of the above statements is true.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4e6e7968-c281-4217-bacd-9e41c6260c78%2F666677ae-e13e-43e6-813f-ad3b92232072%2Fpw6e0hj_processed.jpeg&w=3840&q=75)
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