Which of the following measurements of cost of capital is relatively easy?

Cost of debt

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Cost of preference shares

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Cost of equity capital

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Cost of retained earnings

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A Cost of debt
WACC is calculated by multiplying the cost of each capital source (debt and equity) by its relevant weight, and then adding the products together to determine the value. In the above formula, E/V represents the proportion of equity-based financing, while D/V represents the proportion of debt-based financing.

Suggest Corrections

Similar questions

The cheapest source of finance is

(a) debenture

(b) equity share capital

(d) retained earning

17 %

6 %

P = \frac{D + \frac{R_{a}}{R_{c}} (E - D)}{R_{c}}

P =

D = D P S

E = E P S

E - D =

R_{a} =

R_{c} =

List-I	List-II
(a) Realised yield method	(i) Cost of equity share capital
(b) Taxation	(ii) Cost of equity capital
(c) Cost of total capital employed	(iii) Cost of debt capital
(d) Dividend growth is a consideration	(iv) Weighted cost of capital

Join BYJU'S Learning Program