Q14Which of the following assumption of cost of capital is wrongly stated?a.It is not a cost as suchb.It is the minimum rate of return on financec.It is the minimum rate of return on investmentd.It consists of riskless cost, business risk and financial risk

The right answer is option a it is not a cost as such

Answered: uch b. It is the minimum rate of return…

Business

Accounting

uch b. It is the minimum rate of return on finance c.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter15: Financial Statements And Year-end Accounting For A Merchandising Business

Section: Chapter Questions

Problem 4TF

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Concept explainers

Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.

Question

Q14

Which of the following assumption of cost of capital is wrongly stated?

It is not a cost as such

It is the minimum rate of return on finance

It is the minimum rate of return on investment

It consists of riskless cost, business risk and financial risk

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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