Examveda
Examveda

The company's cost of capital is called ________.

A. Leverage

B. Hurdle rate

C. Risk rate

D. Return rate

Answer: Option B

Solution(By Examveda Team)

A company's cost of capital is simply the cost of money the company uses for financing. If a company only uses current liabilities and long-term debt to finance its operations, then it uses debt and the cost of capital is usually the interest rate on that debt.The cost of capital is also called the hurdle rate.

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Related Questions on Financial Management

Investment is the _______________.

A. net additions made to the nation’s capital stocks

B. person’s commitment to buy a flat or house

C. employment of funds on assets to earn returns

D. employment of funds on goods and services that are used in production process