#cfa-level-1 #corporate-finance #reading-36-cost-of-capital
The
cost of capital is the rate of return that the suppliers of capital—bondholders and owners—require as compensation for their contribution of capital.
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2. COST OF CAPITAL
The cost of capital is the rate of return that the suppliers of capital—bondholders and owners—require as compensation for their contribution of capital. Another way of looking at the cost of capital is that it is the opportunity cost of funds for the suppliers of capital: A potential supplier of capital will not voluntarily invest in a Summary
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