A single, overall cost of capital is often used to evaluate projects because:

Related MCQs

• Two mutually exclusive investment proposals have "scale differences" (i.e., the cost of the projects differ). Ranking these projects on the basis of IRR, NPV, and PI methods give contradictory results.
• A company can increase its value and reduce the overall cost of capital by increasing the proportion of debt in its capital structure according to ----- approach
• Market values are often used in computing the weighted average cost of capital because
• In mutually exclusive projects, projects which are selected for comparison must have
• A company should arrange the capital structure in such a way that there is maximum flexibility in the capital and cost of capital is
• According to MM approach, two identical firms in all respects except their capital structure can not have different market values or cost of capital because of-----
• According to which theory two identical firms in all respect except their capital structure can not have different market value or cost of capital because of arbitrage process
• Cost of Equity Share Capital is more than cost of debt because:
• Overall cost of capital, according to ------ approach, decreases up to a certain point, remains unchanged for moderate increase in debt thereafter, and increase beyond a certain point
• The overall cost of capital, according to which theory, decreases up to a certain point, remains more or less unchanged for moderate increase in debt thereafter and increases a certain point