The weighted average cost of capital of a firm represents the:
A. minimum rate of return a firm must earn on average-risk investments to maintain its current value.
B. maximum rate of return a firm can expect to earn on its investments.
C. maximum interest rate a firm should pay on the debt it uses.
D. minimum dividend yield a firm must pay to its preferred stockholders.
E. required rate of return that should be used to evaluate capital budgeting projects that have above-average risk.
Answer: A
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