2. Cost of Capital
• Cost of Capital is the minimum rate expected by the
investor or cut off rate of capital expenditure.
Importance
• Helpful in Capital Budgeting
• Helpful in capital Structure
• Performance Appraisal
• Other financial decisions
3. Factors affecting Cost of Capital
• Cost of Equity
• Cost of Debt
• Government Policy
• Floatation Cost
• Leverage
• Profitability
4. Types of Cost
• Historical and Future Cost
• Specific and Composite Cost
• Explicit and Implicit cost
• Average Cost and Marginal Cost
• Shut Down and Sunk Cost
