Cost of capital is the minimum rate of return a company must earn on its existing assets to maintain its stock price. It is important because it determines whether a project is worth undertaking. Cost of debt is impacted by whether debt is issued at par, premium or discount, and after-tax costs are lower. WACC is a weighted average of the costs of a company's various capital components. The CAPM model uses beta and expected market returns to estimate the cost of equity for a company.