December 2012
Intermediate to advanced
250 pages
7h 30m
English
Towards a definition of the cost of capital
Understanding the principles that determine the cost of capital
The relationship between risk and return
Behavioral aspects of the cost of capital
This chapter deals with the concepts that underpin the application of cost of capital.
Companies obtain capital from both shareholders (equity) and lenders (debt). Both types of capital come at a cost. This is because investors require a return to reflect the opportunity cost associated with committing their money over a period of time. For debt this cost is the rate of interest that the lender charges – this varies with the amount of ...
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