cost of capital

listen to the pronunciation of cost of capital
German - Turkish
ücret sermayesi
English - English
The opportunity cost of the funds employed as the result of an investment decision; the rate of return that a business could earn if it chose another investment with equivalent risk. (synonym) cost of capital
Management's estimate of its weighted average cost of equity and debt capital
cost of raising money, money paid in order to maintain methods of income
The discount rate that should be used in the capital budgeting process
the expected rate of return (discount rate) that the market requires in order to attract funds to a particular investment
Used in computing an objective function, it is the interest rate The units are currency per time period (e g , dollars per year) One must be careful in computing this For example, the marginal cost of capital can be greater than the marginal interest rate because the latter applies to the entire borrowing, not just the last dollar borrowed (This is the "classical" definition, which does not consider advances in option theory )
The cost to a company, such as a REIT, of raising capital in the form of equity (common or preferred stock) or debt The cost of equity capital generally is considered to include both the dividend rate as well as the expected equity growth either by higher dividends or growth in stock prices The cost of debt capital is merely the interest expense on the debt incurred
The rate of return a utility must offer to obtain additional funds The cost of capital varies with the leverage ratio, the effective income tax rate, conditions in the bond and stock markets, growth rate of the utility, its dividend strategy, stability of net income, the amount of new capital required, and other factors dealing with business and financial risks It is a composite of the cost for debt interest, preferred stock dividends, and common stockholders' earnings that provide the facilities used in supplying utility service
A company issues stock (or debt) in exchange for capital to fund its operations The investor provides this capital by purchasing shares (or bonds) in exchange for an expected return Because the company foregoes the return on the stock or debt it issues, its cost of capital is identical to the investor's expected return
The weighted-averaged cost of: common equity, preferred equity and debt (after tax) of the individual company or sector The cost of debt is the average interest rate for all the company’s or sector’s debt instruments over the forecast period The cost of equity is the average total return demanded by an equity investor to invest in the company or sector The cost of equity is assumed to be the same for all companies and to be driven by personal income tax rates, inflation expectations and the long-run historical difference in real, after-tax returns between equities and bonds
The rate of return required by investors on the capital provided by them
The rate of return that a firm must earn on the projects in which it invests to maintain its market value and attract funds (Chapter 11)
Weighted market value cost of capital, which can meet a company's requirements for capital and reserves as well as loan capital
The cost to borrow or invest capital
the rate of return that a firm must pay to acquire investment funds
The cost, expressed as a yield rate, of investment funds obtained either through borrowing, equity investment, or retention of earnings
The cost of funds to a business enterprise It is calculated as the weighted average cost of debt and equity used by the firm More generally, it is the rate of return expected by the company’s equity investors
The rate that a company must pay for its capital or the minimum return that is required to maintain the market value of a company's common stock Cost of capital reflects the market's perception of the risk associated with a company's common stock
The cost of alternative sources of financing to the firm
i or WACC - Interest rate paid for the use of capital funds; includes both debt and equity funds For debt and equity considered, it is weighted average cost of capital (10 2–3)
Variously defined as the weighted average of the cost of equity and debt capital employed by a REIT Unfortunately, an incorrect definition of this term is often commonly used, which equates the cost of equity capital to the REIT’s current dividend yield or FFO yield A company’s "true" cost of capital is the investor’s expected rate of return on his/her investment
The Cost of Capital is the expected return that you require on an investment to compensate you for its level of risk It is the appropriate rate to use when Discounting cash flows to find the Present Value of a Security
- the expected rate of return (discount rate) that the market requires in order to attract funds to a particular investment
cost of capital

    Hyphenation

    cost of cap·i·tal

    Turkish pronunciation

    kôst ıv käpıtıl

    Pronunciation

    /ˈkôst əv ˈkapətəl/ /ˈkɔːst əv ˈkæpətəl/
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