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1 year ago

Financial managers increase value by accepting all investment projects that earn _____ the opportunity cost of capital.

1 answer:

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Financial managers increase value by accepting all investment projects that earn more than the opportunity cost of capital.

What is the opportunity cost of capital?

The opportunity cost of capital is the rate of return that could be earned from an alternative investment opportunity if the funds are released for other investment projects.

For an investment project to be acceptable and value-creating its rate of return should be more than the cost of capital, which is the cost of funding or financing the project.

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