Cost Of Capital

What Does Cost Of Capital Mean?
The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile. Cost of capital includes the cost of debt and the cost of equity.

Investopedia explains Cost Of Capital
The cost of capital determines how a company can raise money (through a stock issue, borrowing, or a mix of the two). This is the rate of return that a firm would receive if it invested in a different vehicle with similar risk.

Filed Under: Budgeting, Financial Theory

Related Terms

Capital Budgeting
Cost Of Debt
Cost Of Equity
Opportunity Cost
Payback Period
Return On New Invested Capital - RONIC
Risk
Unlevered Cost Of Capital
Weighted Average Cost Of Capital - WACC
Weighted Average Cost of Equity - WACE
More Related Terms

Related Links

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