Cost of capital is commonly used interchangeably with all of the following terms except:

Question

Quizplus · Accepted Answer

Cost of capital and internal rate of return are not interchangeable terms. The internal rate of return is the rate at which the cash flows from a project or investment equal to zero, while cost of capital is the cost of funds used for financing the project or investment. The other three terms, the firm's required rate of return, the hurdle rate for new investments, and the firm's opportunity cost of funds, are all commonly used interchangeably with the term cost of capital.

Cost of Capital Is Commonly Used Interchangeably with All of the Following