In a stroke of good luck, your company has uncovered an opportunity to invest for 10 years

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In a stroke of good luck, your company has uncovered an opportunity to invest for 10 years at a guaranteed 8% rate of return. What is the opportunity cost of capital? Assume interest rates as in Table 2.2.

Table 2.2

Credit Rating Interest Rate (%) AAA-rated 3.35 AA-rated 3.93 A-rated 4.28 BBB-rated 5.08 BB-rated 5.27 B-rated 6.35

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...
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Related Book For  answer-question

Fundamentals Of Corporate Finance

ISBN: 9781259087585

6th Canadian Edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan, Gordon Roberts

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