CHAPTER 5 QUESTIONS 6. The Cost of capital is the required return necessary to make a capital budgeting project, such as building a new factory, worthwhile. TORF _7. The Cost of capital includes the cost of debt and the cost of equity and the cost of preferred if any. T OR F. 8. Capital structure refers to how the value of the total assets of a firm are distributed over the various components of capital structure such as debt and equity only. T OR F