K_e represents an expected return to stockholders as well as a cost to the firm.

Name: K e represents an expected return to stockholders as well as a cost to the firm.
Brand: Quizplus
Rating: 4.8 (31 reviews)

Question

Quizplus · Accepted Answer

K_e represents the weighted average cost of capital (WACC), which incorporates both the expected return to stockholders (cost of equity) and the cost to the firm of raising funds from debt and other sources (cost of debt and cost of preferred stock). Therefore, it represents both a return to stockholders and a cost to the firm.

Ke Represents an Expected Return to Stockholders as Well as a Cost

K_e Represents an Expected Return to Stockholders as Well as a Cost