Question
The cost of capital for a firm
_______.Solution
The cost of capital is the rate of return that a company must earn on its investments in order to satisfy its investors or creditors. It is the minimum return that a company must generate to compensate its investors or creditors for the risk they are taking by investing in or lending to the company. The cost of capital is calculated by taking a weighted average of the cost of debt and the cost of equity financing.
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