Cost of capital information is necessary to establish the minimum rate of return on investments.

Question

Quizplus · Accepted Answer

The cost of capital is used to determine the minimum acceptable rate of return on investments. This is important because if the rate of return on an investment is lower than the cost of capital, the investment is not generating enough profit to cover the cost of financing it, and it is better to use the money elsewhere. Therefore, cost of capital information is essential for making investment decisions.

Cost of Capital Information Is Necessary to Establish the Minimum