The cost of capital of a long term debt is generally.

Well, the answer is that cost of debt is cheaper than cost of equity. As debt is less risky than equity, the required return needed to compensate the debt investors is less than the required return needed to compensate the equity investors. HENCE, The cost of capital of a long term debt is generally Lower than the owned funds

I think answer A is correct because they are treated as operating expenses and deducted before tax. So they are less costly as compared to the equity or owned funds.

I feel answer 'A' is correct, because shareholders investing in the company will expect a return that is prevailing in the equity market which is always higher than the interest rate of loans. Also bank loan is tax deductible so it will be cheaper compared to equity. same an be seen while calculating the cost of capital of any company through CAPM model.

I think cost of debt is lower than owned fund.as interest is deductible expense while charging tax.and rate of interest is generally lower than the rate of dividend.. I believed Option A is correct