Reason: Weighted average cost of capital is the average of the cost of different sources of financing that the firm uses weighted by the proportion of each source of financing in the overall capital structure. It is the minimum required rate of return that will satisfy all the investors.
The weighted average cost of capital (WACC) is:
(a)that rate of return that will satisfy all of the investors.
(b)the lowest interest rate in the market.
(c)the higher of the interest rate on debt or the dividend rate of preferred stock.
(d)the amount needed to finance a particular purchase.
Choose the response with reason.
