CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

Which of the following statements is false?

A. The first element in the capital budgeting decision is determining the proper discount rate or cost of capital.
B. The cost of capital is independent of the funds used to finance the project.
C. The cost of capital is independent of the funds the firm typically uses.
D. The cost of capital is the weighted average of the various types of funds a firm generally uses.
Correct Answer: C

The cost of capital is determined by the costs of the different funds a firm uses.

User Contributed Comments 3

User Comment
mtcfa I agree with C, nut I thought the 1st step was to decide which projects you want to consider.
JP09 The cost of capital is DEPENDENT on the funds the firm typically uses.
missmalik My answer is C.
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