A project's opportunity cost of capital is:

Multiple Choice:

O the return that shareholders could expect to earn by investing in the financial markets.

O the return earned by investing in the project.

O equal to the average return on all company projects.

O designed to be less than the project's IRR.

Question

Business

Omari Villegas

25 May, 20:12

A project's opportunity cost of capital is:

Multiple Choice:

O the return that shareholders could expect to earn by investing in the financial markets.

O the return earned by investing in the project.

O equal to the average return on all company projects.

O designed to be less than the project's IRR.

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Answers (1)

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Sophie · Answer 1

the return that shareholders could expect to earn by investing in the financial markets

Explanation:

Projects are financed from a joined pool of funds. The Cost of Capital is the minimum return that a project must offer before it can be accepted and this is determined by the return that shareholders could expect to earn by investing in the financial markets.

A project's opportunity cost of capital is:Multiple Choice:O the return that shareholders could expect to earn by investing in the financial markets.O the return earned by investing in the project.O equal to the average return on all company projects.O designed to be less than the project's IRR.