- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 6. Capital Structure
- Subject 1. The Cost of Capital
CFA Practice Question
Which of the following statements is false?
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.
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. |