Difference between revisions of "Cost of capital"
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:[[Cost of capital]]. The amount forgone by holding a unit of capital for one period, including interest, depreciation, and the gain or loss from the change in the price of capital. | :[[Cost of capital]]. The amount forgone by holding a unit of capital for one period, including interest, depreciation, and the gain or loss from the change in the price of capital. | ||
According to [[Cost Accounting by Horngren, Datar, Rajan (14th edition)]], | According to [[Cost Accounting by Horngren, Datar, Rajan (14th edition)]], | ||
| − | [[Cost of capital]]. See required rate of return (RRR). | + | :[[Cost of capital]]. See required rate of return (RRR). |
According to the [[Corporate Strategy by Lynch (4th edition)]], | According to the [[Corporate Strategy by Lynch (4th edition)]], | ||
:[[Cost of capital]]. The cost of the capital employed in an organization, often measured by the cost of investing in a risk-free bond outside the organization coupled with some element for the extra risks, if any, of investing in the organization itself. See also Weighted average cost of capital. | :[[Cost of capital]]. The cost of the capital employed in an organization, often measured by the cost of investing in a risk-free bond outside the organization coupled with some element for the extra risks, if any, of investing in the organization itself. See also Weighted average cost of capital. | ||
[[Category: Economics]][[Category: Articles]][[Category: Strategic Management]] | [[Category: Economics]][[Category: Articles]][[Category: Strategic Management]] | ||
Revision as of 19:43, 10 July 2020
Cost of capital is the amount forgone by holding a unit of capital for one period, including interest, depreciation, and the gain or loss from the change in the price of capital.
Definition
According to Macroeconomics by Mankiw (7th edition),
- Cost of capital. The amount forgone by holding a unit of capital for one period, including interest, depreciation, and the gain or loss from the change in the price of capital.
According to Cost Accounting by Horngren, Datar, Rajan (14th edition),
- Cost of capital. See required rate of return (RRR).
According to the Corporate Strategy by Lynch (4th edition),
- Cost of capital. The cost of the capital employed in an organization, often measured by the cost of investing in a risk-free bond outside the organization coupled with some element for the extra risks, if any, of investing in the organization itself. See also Weighted average cost of capital.
