Minimum Rate of Return that a firm must earn in order to satisfy its investors, is also known as __________________.

Average Return on Investment

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Weighted Average Cost of Capital

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Net Profit Ratio

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Average Cost of borrowing

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Solution

The correct option is C Weighted Average Cost of Capital
The weighted average cost of capital is the rate that the company is expected to pay on an average to all the lenders against the money invested or funded by them. It included all sources i.e. equity share holders, debts, preference share holders, bonds etc. Its also known as the minimum rate of return that a firm must earn to satisfy its investors.

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