How do companies keep surviving when their returns are less than cost of capital for many years?

Question

I have decent understanding of every business topic except why business are running with cost of capital 10-12% but they make only 5-8%. If they keep losing at some point the debt becomes unsustainable. How come they keep getting funds?

What’s the point of such business? Is it only to create jobs?

In: Economics

Answer 1

I always wondered this with the grocery business that I worked in making 3-5%. Why bother putting any money into it?

That company in particular has continued to shrink over the years.