Business Dictionary

Millennium Software, Inc.


Excel<BR>Templates

Excel
Templates


Management<BR>Tools

Management
Tools


<NOBR>Complete Set<BR>Templates</NOBR>

Complete Set
Templates


PayPal<BR>Ordering

PayPal
Ordering


AdExcel<BR>Hosting

AdExcel
Hosting


Customer<BR>Login

Customer
Login


AdExcel<BR>Login

AdExcel
Login


Dictionary<BR>Login

Dictionary
Login





Topics:

Help:

(You need to be logged in)


Access Dictionary

Log in
to Dictionary


Complete Set
Excel Templates


Store

Download Files


Cost of Capital

Cost of capital = {equity/[debt+equity]} x equity interest rate + (debt/[debt+equity]) x debt interest rate x (1-Tax rate).

A worked example:

Share Price 1.00
Gov. Bond Rate 3.25%
Risk Premium 5.00%
Debt Interest rate 8.00%
Tax rate 25%

Cost of capital = 8.25% p.a.

Check Windex 2 and 5 for cost of capital calculations.



Dictionary

Reference Pages

WACC

Capital Asset Pricing