Which one of the following is the primary consideration for determining the cost of capital for a project? Select one: a. The risk level of the project b. The initial capital requirement c. The payback period d. The firm's current cost of capital e. The expected net present value
Option A is correct. The Risk Level of the project.
Risk determines what to expect in returns out of the project. Higher the risk, higher will be the expectations to get a higher return from the project and vice - versa. Risk is the primary determinant to calculate the cost of capital.
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