What is the rate of return normally required by investors when investing in a firm?
A)capital required ROI
B)capitalization rate
C)weighted average cost of capital (WACC)_
D)current yield

Question

Quizplus · Accepted Answer

The weighted average cost of capital (WACC) represents the rate of return required by all investors (both equity and debt) to invest in a firm. It is calculated as a weighted average of the cost of each source of capital (i.e. equity, debt). Therefore, C is the most accurate answer. Options A, B, and D do not represent the rate of return required by all investors.

What Is the Rate of Return Normally Required by Investors