#cfa-level-1 #corporate-finance #reading-36-cost-of-capital
The cost of capital of a company is the required rate of return that investors demand for the average-risk investment of a company.
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2. COST OF CAPITALroject. Therefore, the cost of capital that the investment analyst is concerned with is a marginal cost.
Let us focus on the cost of capital for the entire company (later we will address how to adjust that for specific projects). <span>The cost of capital of a company is the required rate of return that investors demand for the average-risk investment of a company. The most common way to estimate this required rate of return is to calculate the marginal cost of each of the various sources of capital and then calculate a weighted average of these c
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