In capital budgeting analysis,when computing the weighted average cost of capital,the CAPM approach is typically used to find which of the following?
A) market value weight of equity
B) pretax component cost of debt
C) after-tax component cost of debt
D) component cost of internal equity

Question

Quizplus · Accepted Answer

The CAPM approach is used to find the component cost of internal equity, which is the expected return investors require from a company's stock. This is a crucial component in the calculation of the weighted average cost of capital (WACC), which is used to evaluate the attractiveness of capital investment opportunities. The other choices listed (A, B, and C) are not directly related to the CAPM approach or the calculation of WACC.

In Capital Budgeting Analysis,when Computing the Weighted Average Cost of Capital,the