A capital investment generates a satisfactory rate of return when its return is:

Question

Quizplus · Accepted Answer

A capital investment must generate a rate of return that is equal to or greater than the firm's cost of capital to be considered satisfactory. This is because the cost of capital represents the minimum return required by the firm's investors to compensate for the risk they are taking by investing in the project. If the return on the investment is lower than the cost of capital, the project is not generating enough returns to cover its cost and is therefore not viable.

A Capital Investment Generates a Satisfactory Rate of Return When