The cost of capital is used to decide whether a proposed corporate investment will increase or decrease a firm's stock price.

Question

Quizplus · Accepted Answer

The cost of capital is an important factor in determining the feasibility of a proposed investment as it measures the cost of funding and the expected rate of return. By comparing the cost of capital to the potential returns from the investment, a firm can determine whether the investment is likely to increase or decrease its stock price. Therefore, the statement is true.

The Cost of Capital Is Used to Decide Whether a Proposed