Companies use their cost of capital to compensate for the risk they take on in investing in new projects and ventures.

Name: Companies use their cost of capital to compensate for the risk they take on in investing in new projects and ventures.
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Question

Quizplus · Accepted Answer

The cost of capital represents the return rate that a company must earn on its investments to maintain its market value and attract funds. It compensates for the risk associated with investing in new projects.

Companies Use Their Cost of Capital to Compensate for the Risk