A chief use of the marginal cost of capital estimate is in capital-budgeting decision making.
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2.3. Applying the Cost of Capital to Capital Budgeting and Security Valuation
With some insight now into the calculation of the cost of capital, let us continue to improve our understanding of the roles it plays in financial analysis. A chief use of the marginal cost of capital estimate is in capital-budgeting decision making. What role does the marginal cost of capital play in a company’s investment program, and how do we adapt it when we need to evaluate a specific investment project?
A company
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