A firm may have to rely upon a competitor's cost of capital to ascertain the appropriate required return for a project.

Name: A firm may have to rely upon a competitor's cost of capital to ascertain the appropriate required return for a project.
Brand: Quizplus
Rating: 4.7 (58 reviews)

Question

Quizplus · Accepted Answer

A firm may use a competitor's cost of capital as a benchmark if the project is similar in risk to the competitor's operations and the firm lacks sufficient data to calculate its own cost of capital.

A Firm May Have to Rely Upon a Competitor's Cost