Question

define the term cost of capital

Answer 1

Cost of capital is the required rate of return that is used for capital budgeting a project worthwhile or not.cost of capital is a combination of cost of debt and the cost of equity.cost of capital is the cost of funds that are used for financing the business.cost of capital depends on the capital structure if the company has only equity than cost of capital is the cost of equity,if it has only debt than cost of capital is the cost of debt ,if it has both then cost of capital is through weighted average cost of capital.

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