Question

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.

Answer 1

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

Step-by-step 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.