The ________ is the rate of return required by the market suppliers of capital in order to attract their funds to the firm.
A) yield to maturity
B) internal rate of return
C) cost of capital
D) modified internal rate of return

Question

Quizplus · Accepted Answer

The cost of capital is the rate of return required by the market suppliers of capital (i.e. investors, lenders, etc.) in order to provide funds to a firm. It represents the opportunity cost of investing in one asset instead of another with comparable risk. The cost of capital is a critical input in many financial decisions, such as determining whether to pursue a new investment, how to fund it, and whether it will generate adequate returns for stakeholders.

The ________ Is the Rate of Return Required by the Market