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Watch the video called The Cost of Capital: Intel. Why do we use the right-hand side of the balance sheet (debt and equity) to
Watch the video called "The Cost of Capital: Intel". Why do we use the right-hand side of the balance sheet (debt and equity) to estimate the firm's overall cost of capital, rather than, say, the left-hand side of the balance sheet (assets)? A. Because we have market prices for debt and equity that allow us to ascertain what returns investors require. B. Because it is the mix of debt and equity that the firm chooses that primarily determines its cost of capital. C. It is incorrect to use the right-hand side of the balance sheet to estimate the cost of capital. D. None of the answers is a reasonable explanation as to why we use the right-hand side of the balance sheet to estimate the cost of capital.
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