Solved: Financing costs to capitalize the business, Other Management

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Financing costs to capitalize the business

Question: Companies seek the lowest average rate of financing costs to capitalize the business. Common sources of financing are as follows:

- Common stock equity
- Preferred stock equity
- Bond debt

Question: Explain how the following risks may affect these 3 sources of financing and the impact overall on weighted average cost of capital (WACC):

- Default risk
- Inflation
- Interest rate risk
- Stock and market volatility

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Other Management: Financing costs to capitalize the business

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