Cost of capital is often represented by which of the following notions : A. Required rate of return B.…
In corporate finance and capital budgeting, a firm's Cost of Capital (WACC) serves as the minimum benchmark return and is synonymously referred to as the Required Rate of…
Choose your answer
Cost of capital is often represented by which of the following notions :
A. Required rate of return
B. Discount rate
C. Hurdle rate
D. Average rate of return
E. Return on investment
Answer and explanation
Correct answer A
In corporate finance and capital budgeting, a firm's Cost of Capital (WACC) serves as the minimum benchmark return and is synonymously referred to as the Required Rate of Return (A), the Discount Rate for NPV calculations (B), and the Hurdle Rate for IRR comparisons (C). Average Rate of Return (D) and Return on Investment (E) are accounting return metrics. Thus, A, B and C only are correct.
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UGC NET Management