Which of the following statement(s) is/are true about Herts 8 Partners Lid's cost of capital? (Select the correct answer from the options below the statements) (1) The cost of capital is an indication of Herts & Partners Ltd's cost of borrowing (2) The cost of capital is Herts 6 Partners Ltd's cost of equity (3) The cost of capital gives an indication of the time value of money (1) only (1) and (2) (1) and (3) (2) and (3)

## Step 1: Understand the concept of the cost of capitalThe cost of capital refers to the opportunity cost of making an investment, taking into account the potential return of alternative investment. It includes various costs like cost of equity, cost of debt, and considers the time value of money. ## Step 2: Assess each statement about Herts 8 Partners Ltd's cost of capital- The cost of capital indeed includes their cost of borrowing. Therefore, this statement is correct.- The cost not only requires their cost of equity but also cost of debts, thus this statement is imprecise.- Time value of money is an essential concept in determining the cost of capital since it refers the notion that a unit of currency today is worth more than the same unit of currency at a future date due to its potential to earn interest. Hence, this statement is true as well.