3 concepts
Defining the Cost of Capital
Risk, return, and the time value of money are central inputs in distilling the cost of capital as an investor or borrower.
Differences Between Required Return and the Cost of Capital
The average cost of capital is calculated via combining the overall average required rate on debt stakeholders and equity stakeholders
Relationship Between Financial Policy and the Cost of Capital
Financial policy, not cost of capital, must be utilized to determine which investments to pursue, given that resources are limited.