The cost of capital for corporate investment is set by the rates of return on investment opportunities in financial markets.

Question

Quizplus · Accepted Answer

The cost of capital for corporate investment is determined by the rates of return on investment opportunities available in financial markets, as these rates represent the opportunity cost of investing in a particular project or asset. In other words, companies must earn a return on investment that is equal to or greater than the cost of sourcing capital to fund the investment.

The Cost of Capital for Corporate Investment Is Set by the Rates