Which term describes the cost of capital that considers the proportion of debt and equity in a company?

The correct term that describes the cost of capital while considering the proportion of debt and equity in a company is the Weighted Average Cost of Capital (WACC). WACC represents the average rate a company is expected to pay to finance its assets, weighted according to the proportion of debt and equity in the capital structure.

The calculation of WACC takes into account the cost of equity, which is the return required by equity investors given the risk of an investment in the company, and the cost of debt, which is the effective rate that the company pays on its borrowed funds. By weighing these components according to their relative proportions, WACC provides a unified measure of a company's cost of capital that reflects both equity and debt financing.

The other terms do not capture this aspect of capital structure. The Capital Asset Pricing Model (CAPM) primarily helps estimate the expected return on equity based on systematic risk, but does not consider the company’s capital structure. The Cost of Equity (COE) specifically refers to the return expected by equity investors without factoring in debt. Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment but does not relate to the cost of capital or the mix of financing sources.