The cost of capital of a project:
A)depends on the characteristics of the company undertaking the project.
B)depends on the characteristics of the investors.
C)is considered on a project-by-project basis.
D)depends on the correlation of the proposed project's cash flows with the existing cash flows of the company.

Question

Quizplus · Accepted Answer

The cost of capital of a project is considered on a project-by-project basis. It is the minimum return that a company must earn on its investments in a project to satisfy the demands of its investors or creditors. This cost is based on factors such as risk level, borrowing costs, and expected returns. Therefore, it is specific to the project being evaluated and can vary from one project to another, even within the same company.

The Cost of Capital of a Project