Archive | Cost of Capital

Opportunity and Marginal Cost of Capital (With Diagram)

In this article we will discuss about the opportunity and marginal cost of capital, with the help of suitable diagrams. Opportunity Cost of Capital: When an organization faces shortage of capital and it has to invest capital in more than one project, then the company will meet the problem by rationing the capital to projects […]

Top 4 Elements of Cost of Capital | Company

The following points highlight the top four elements of cost of capital. The elements are:- 1. Cost of Equity Capital (Ke) 2. Cost of Retained Earnings (K) 3. Cost of Preferred Capital (Kp) 4. Cost of Debt (Kd). Element # 1. Cost of Equity Capital (Ke): The funds required for the project are raised from […]

Top 4 Significances of Cost of Capital | Financial Management

This article throws light upon the top four significances of cost of capital. The significances are: 1. As an Acceptance Criterion in Capital Budgeting 2. As a Determinant of Capital Mix in Capital Structure Decisions 3. As A Basis for Evaluating the Financial Performance 4. As a Basis for taking other Financial Decisions. Significance of […]

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