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10 February, 13:24

The cost of capital used in capital budgeting should reflect the average cost of the various sources of investor-supplied funds a firm uses to acquire assets. T/F

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  1. 10 February, 14:34
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    Answer: True

    Explanation: In simple words, cost of capital used in the capital budgeting is the average rate of return that is expected by the investors of the business. A company acquire funds for operations through securities like debt, equity and preference and the cost of capital reflects the cost that a company has to bear for borrowing the money.

    Cost of capital is used for evaluating the profitability of various projects that a company is intended to take.
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