The weights used in weighted average cost of capital must be ________.
A) greater than 50%
B) nonnegative
C) less than zero
D) zero

Question

Quizplus · Accepted Answer

The weights used in weighted average cost of capital must be nonnegative, meaning they cannot be negative but can be zero or positive. This is because the weights represent the proportion of each type of capital in the company's capital structure, and negative weights would not make sense in this context. Greater than 50% and less than zero are not valid options, and choosing zero weights would exclude certain types of capital from the calculation, which would not accurately represent the company's cost of capital.

The Weights Used in Weighted Average Cost of Capital Must