Lester lent money to the corner store by purchasing bonds issued by the store. the rate of return that he and the other lenders require is referred to as the cost of debt.
CAPM has a crucial utility in company finance as properly. The finance literature defines the price of fairness because of the anticipated return on a corporation's inventory. The inventory's predicted return is the shareholders' possibility fee of the equity price range hired by the organization.
The weighted common cost of capital WACC is an important economic precept that is widely utilized in monetary circles to test whether a return on investment can exceed or meet an asset mission or organization's fee of invested capital fairness plus debt. when the business enterprise wants to generate a good deal cash flows as it's miles paying to the buyers for their capital.
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