The Marginal Cost of Capital MCC) Is the Discount Rate

Multiple Choice

The marginal cost of capital MCC) is the discount rate which represents the marginal cost of investment funds to the firm, and:

A) is calculated as a weighted average of the after-tax cost of the last dollar raised from each source.
B) is calculated as a weighted average of the after-tax cost of all funds used in the capital budget.
C) is calculated as a weighted average of the before-tax cost of the last dollar raised from each source.
D) calculated as a weighted average of the before-tax cost of all funds used in the capital budget.
E) is calculated as a weighted average of the after-tax cost of funds raised from bank and bond borrowings.