Financial management spring 2014 assignment 4 the returns on a stock
If a firm uses the opportunity cost of capital for the entire company, they would typically accept projects that generate returns greater than or equal to the opportunity cost of capital. This means that in order for a project to be accepted, it must not only provide a higher return than other investments available with similar risk levels but also generate sufficient returns such that the costs associated with financing it can be covered. In addition, the firm may also take into account factors such as liquidity requirements and market conditions when making decisions on which projects to accept or reject.