Final answer:
Financial managers typically use the highest cost of capital when evaluating market expansion projects.
Step-by-step explanation:
Financial managers typically use the highest cost of capital when evaluating market expansion projects.
Market expansion projects involve entering into new markets or expanding existing market share. These projects often require significant capital investment and entail higher risks compared to other types of projects.
For example, a company may decide to open a new branch in a foreign country or acquire a competitor to expand its market presence. In such cases, financial managers will consider the cost of capital, including the cost of borrowing funds or issuing stocks, to evaluate the profitability and feasibility of the project.