Which of the following is not a component used in calculating the cost of capital?

A) The cost of short-term debt
B) The cost of long-term debt
C) The cost of retained earnings
D) The cost of preferred stock
E) The cost of common stock

Cost of Capital

Refers to the opportunity cost of making a specific investment, representing the rate of return that could have been earned by putting the same money into a different investment with equal risk.

Short-Term Debt

Obligations or loans that are due to be paid back within a short period, typically one year or less.

Long-Term Debt

Borrowings and financial obligations lasting over one year, used to finance operations or acquisitions.