The correct answer is C. expected.
Cost of capital is the expected rate of return that a company must pay to its investors in order to attract their capital. It is the minimum rate of return that a company must earn on its investments in order to break even.
The cost of capital is a key factor in a company’s financial planning. It is used to determine the cost of new projects, the price of new shares, and the amount of debt that a company can afford to take on.
The cost of capital is calculated by taking into account the risk of the company’s investments, the return that investors expect, and the cost of debt.
The cost of capital is an important concept in finance. It is used to make decisions about how to allocate resources and how to price products and services.
Here is a brief explanation of each option:
- Option A: minimum. This is not the correct answer because the cost of capital is not the minimum rate of return that a company must pay to its investors. The cost of capital is the expected rate of return that a company must pay to its investors in order to attract their capital.
- Option B: maximum. This is not the correct answer because the cost of capital is not the maximum rate of return that a company must pay to its investors. The cost of capital is the expected rate of return that a company must pay to its investors in order to attract their capital.
- Option C: expected. This is the correct answer because the cost of capital is the expected rate of return that a company must pay to its investors in order to attract their capital.
- Option D: marginal. This is not the correct answer because the cost of capital is not the marginal rate of return that a company must pay to its investors. The cost of capital is the expected rate of return that a company must pay to its investors in order to attract their capital.