The minimum acceptable expected rate of return on a project of a specific risk is the:
A) project cost of capital.
B) company cost of capital.
C) risk-free rate of return.
D)project beta times the market risk premium.

Question

Quizplus · Accepted Answer

The minimum acceptable expected rate of return on a project of a specific risk is the project cost of capital, which represents the minimum required rate of return that a company needs to achieve from a project to cover its cost of capital and maintain its value. The project cost of capital takes into account the risk of the project and the cost of financing it, and it reflects the expected return that investors require for taking on that level of risk. Options B, C, and D are not the correct answers because they do not adequately reflect the specific risk of the project and the cost of financing it.

The Minimum Acceptable Expected Rate of Return on a Project