Marginal cost of capital is the cost of:

Additional Sales

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Additional Funds

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Additional Interests

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None of the above

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Solution

The correct option is A Additional Funds
When the firms wants to calculate the cost of additional funds to be raised, called the marginal cost of capital. The marginal cost of capital is the weighted average cost of new capital calculated by the marginal weight. The marginal weight represents the proportion of various sources of funds to be employed in raising additional funds.

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