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Cost of Capital-10 Question to check your knowledge!

Cost of Capital-10 Question to check your knowledge!

The cost of capital is a term used in the field of financial investment to refer to the cost of a company’s funds (both debt and equity), or, from an investor’s point of view “the shareholder’s required return on a portfolio company’s existing securities”. It is is used to evaluate new projects of a company and it is the minimum return that investors expect for providing capital to the company.

Cost of capital is an integral part of investment decision as it is used to measure the worth of investment proposal provided by the business concern. It is used as a discount rate in determining the present value of future cash flows associated with capital projects. It is also called as cut-off rate, target rate, hurdle rate and required rate of return.

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Comment ( 1 )

  1. […] Cost accounting is a sort of accounting procedure that aims to capture a firm’s cost of production by evaluating the input costs of each step of production along with fixed costs such as devaluation of capital equipment. Cost accounting will certainly initially gauge as well as tape-record these costs independently, after that contrast input results to output or actual results to assist company monitoring in determining monetary performance. Click here for quiz on Cost of Capital […]

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