A company's current cost of capital is based on: A) only the return required by the company's current shareholders. D) both the returns currently required by its debtholders and stockholders. B) the current market rate of return on equity shares. C) the weighted costs of all future funding sources. E) the company's original debt-equity ratio.

D) both the returns currently required by its debtholders and stockholders.

Explanation:

The current cost of capital is the return necessary by the mix of equity and debt that a company uses to finance their operations and it helps to determine if a business should continue with a certain project. According to this, the answer is that a company's current cost of capital is based on both the returns currently required by its debtholders and stockholders.

The other options are not right because the current cost of capital considers the return expected by the different sources of capital and because of that options A and B are not the answer. Also, it is about the actual sources of capitl which eliminates option C. Additionally, the debt-equity ratio is about the amount of debt and equity that the company uses but it is not the basis for the company's current cost.