How is a company that uses leverage attempting to earn an overall return that is higher than the cost of funds received?

Question

Quizplus · Accepted Answer

A company that uses leverage is borrowing funds in order to invest in projects or assets that are expected to generate a higher return than the cost of borrowing. This allows the company to amplify its returns and generate more profits for its shareholders. However, there is also more risk involved in this strategy as the cost of borrowing may increase, and the company may not be able to meet its debt obligations if the investments do not perform as expected.

How Is a Company That Uses Leverage Attempting to Earn