The cost of capital represents the minimum rate of return that a project must earn to increase firm value.
Financial managers are ethically required to only invest in initiatives that they anticipate will provide returns greater than the cost of capital. The whole of the company's financing activity is reflected in the cost of capital. The rate of return is a tool for calculating the long-term profit or loss of an investment.
The rate of return statistic can be used to a wide range of assets, including equities, bonds, property, and fine art. The rate of return, or expected return on investment, is essentially computed as a percentage with the average returns (or profits) on an investment serving as the numerator.
To know more about rate of return
brainly.com/question/17164328
#SPJ4
