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

Question

Quizplus · Accepted Answer

This statement is true. A firm may use a competitor's cost of capital as a benchmark or reference point to determine the appropriate required return for a project. However, it should be noted that relying solely on a competitor's cost of capital may not accurately reflect the specific risk and return requirements of the firm's own project.

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