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Investment: Cost of Capital is Greater than the Earned Rate

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It has often been said that if the company can't earn a rate of return greater than the cost of capital it should not make investments. Explain.

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Cost of capital is basically the "cost" that it would require for the company to undertake a project. This includes both equity and debt financing. In other words, the cost of capital determines the method that a company will use to raise money--i.e.--issuance of debt and/or equity or loans. Overall ...

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