The cost of capital is
A) the minimum return that a capital project must earn to be accepted.
B) the maximum return a project can earn.
C) the return the firm had earned on a previous project. .
D) None of the above

Question

Quizplus · Accepted Answer

The cost of capital is the minimum return that a capital project must earn to be accepted. It represents the cost of raising funds from various sources such as debt and equity, and is the benchmark rate against which a firm evaluates the potential return of investments. The cost of capital is used to determine the attractiveness of an investment opportunity and to make decisions about capital budgeting, project financing, and other investment-related activities.

The Cost of Capital Is