1. Introductory concepts Aa Aa Term Answer Description The average rate paid by a firm to secure the outstanding finandial capital used to acquire the firm's assets Capital components A. Investment opportunityB. This concept maintains that the firm's retained earnings should schedule generate a return for the firm's shareholders. Afirm's shareholder wealth-maximizing combination of debt and common and preferred stock. Opportunity cost principle C. Breakpoint This term refers to the individual sources of the firm's financing, incuding its debt, preferred stock, retained earnings, and newly ssued common equity D. Target capital structure The minimum return that must be earned on a irm's investments to ensure that the fim's value does not decrease. E. Flotation costs The return required by providers of capital loaned to the firm A table or graph of a firm's potential investments ranked from the highest internal rate of return to the lowest F. Marginal cost of capitalG. Cost of capital These costs are generally expressed as a percentage of the total amount of securities sold, including the costs of printing the security certificates, applicable taxes, and issuance and marketing fees H. weighted average cost of [ The weighted average cost of the last dotar raised by a firm, or the firm's incremental cost of capital. 1. aavege The amount of capital expenditures made, or to be made, at which the firm's marginal cost of capital increases Cost of debt ]. A firm's cost of retained earnings, or internal equity, can be estimated using a variety of methods. Match the formula and/or the term to its corresponding description. Estimation method Formula