Asked by brianna mcrae on Jul 22, 2024
Verified
The cost of capital is a single rate that reflects the average return paid to investors who provide the firm's capital.
Average Return
The simple mathematical average of a series of returns generated over a period of time.
- Gain an insight into the relevance of the cost of capital during project assessment and how it is calculated.
Verified Answer
JB
Jolie BaynesJul 25, 2024
Final Answer :
True
Explanation :
This statement is true. The cost of capital represents the average cost of financing a firm's assets and is often used to determine the minimum acceptable return that the firm must earn to satisfy its investors. It takes into account both the cost of debt and the cost of equity capital.
Learning Objectives
- Gain an insight into the relevance of the cost of capital during project assessment and how it is calculated.