You are in a discussion with a friend, Lance, about capital budgeting. After hearing you say that financing costs are being ignored, Lance questions you. Your most appropriate response would be:
A. Financing costs are factored into the discount rate.
B. The cost of capital is irrelevant.
C. Accounting takes a backseat to cash flows.
D. Financing costs only matter when you're calculating economic cash flows.
E. Financing costs are explicitly modeled.
