Question

o Importance of Cost of Capital: Why is cost of capital important to Apple, Inc. and what does it measure?

o Meaning of Calculations: How does Apple calculate various costs, and what do these calculations mean to the business?

Answer 1

Cost of capital:-

It refers to the opportunity cost of making a specific

Investment ,it is the rate of return that could have been earned by putting the samemoney in to a different investment with eaqual risk.

How cost of capital helpful to Apple inc.

* It will detrmine Apple's capital structure .

* The cost of capital figure is also important becouse, it is used as the discount rate for the company's free cash flow in the DCF analysis model.

* Apple inc. Can chek, how they uses funds, not how it sources its funds .