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The minimum acceptable expected rate of return on a project of a specific risk is the:________

A. project cost of capital.
B. company cost of capital.
C. risk-free rate of return.
D. project beta times market risk premium.

User Anas Tiour
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Answer: A. project cost of capital.

Step-by-step explanation:

The project cost of capital is the minimum expected rate of project given the type of risk that is attached to it.

When a project is of a certain risk, the company will need a certain rate of return to compensate it for that risk.

This rate is the cost of capital and it is usually based on the company's Weighted Average Cost of Capital (WACC) which measure the cost the company incurs when using equity and debt to raise capital.

The project cost of capital will be a rate that compensates the company enough to enable it compensate its capital providers.

User Ivan Hristov
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