A company's cost of capital can be thought of as a required return for all capital budgeting projects that have risk levels approximately equal to its own.

Question

Quizplus · Accepted Answer

A company's cost of capital represents the minimum rate of return that the company must earn on its investments in order to satisfy its investors' and creditors' required return. It is used as a benchmark for evaluating capital budgeting projects and only projects with risk levels similar to the company's cost of capital should be accepted.

A Company's Cost of Capital Can Be Thought of as a Required