Question

Idle Time Gaming, Inc., knows that its stockholders expect a return on their investment. The expected return that stockholders anticipate translates into the company's ________. Essentially, this is the amount that the investment funds are costing the firm.

Answer 1

Answer: Cost of Capital

Step-by-step explanation:

Capital refers to the overall amount needed to start a business .

What Is Cost of Capital?

Cost of capital refers to the needed or expected return which is crucial in capital budgeting.

This is calculated as cost of debt and cost of equity all combined.

Cost of capital can be used by companies as an indication of whether to consider taking on a particular project.

The investors use it to check if the investment they want to make will yield significant returns which means they can take risk on it if the return is larger.