If the management of a company cannot invest in investment projects that return more than what the suppliers of capital require, the company should:
A) invest the funds in risk-free securities.
B) put the funds to work as best as possible.
C) pay out the funds to be reinvested by shareholders.

Question

Quizplus · Accepted Answer

When a company cannot find investment projects that yield returns higher than the cost of capital, it is generally in the best interest of the shareholders for the company to return the funds to them. This allows shareholders to seek better returns elsewhere, aligning with the goal of maximizing shareholder value.

If the Management of a Company Cannot Invest in Investment