A company's weighted average cost of capital:.
a. is equivalent to the after tax cost of the outstanding liabilities.
b. is un-affected by changes in corporate tax rates.
c. remains constant when the debt-equity ratio changes.
d. is the return investors require on the total assets of the firm.
e. should be used as the required return when analyzing any new project.

The correct answer is D. Is the return investors require on the total assets of the firm.

Explanation:

The Weighted Average Capital Cost (WACC) is a financial measure, which has the purpose of encompassing in a single figure expressed in percentage terms, the cost of the different sources of financing that a company will use to fund a specific project.

To calculate the WACC, it is necessary to know the amounts, interest rates and tax effects of each of the selected sources of financing, so it is worth taking the time to analyze different combinations of these sources and take the one that provides the lower figure .

Comparatively, without going into the detail of the project evaluation, "the WACC must be less than the profitability of the project to be funded" or expressed in another order, "the project performance must be greater than the WACC."

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