Monday, November 24, 2008

What is Cost of Capital?

The cost of capital is the minimum rate of return an investment project must generate in order to pay its financing costs.

For a levered firm, the financing costs can be represented by the weighted average cost of capital:

More information about the weighted average cost of capital

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.