cost of capital

Investment hurdle rate

Cost of capital is the minimum return a company must earn on investments to satisfy its investors—both shareholders expecting profits and lenders expecting interest.

It serves as a benchmark for evaluating projects: if a venture won't return at least the cost of capital, it destroys value rather than creating it.

The project's projected returns fell below our cost of capital, so we passed.

finance

weighted average

Mean adjusted by significance

corporate finance · net present value · retained earnings · dividend yield · financial leverage

risk

beta

Greek alphabet's second letter

credit risk · creditworthiness · credit rating · spread · downgrade · solvency · exposure · hedging · diversification · inflation risk

valuation

discounted cash flow

Time-adjusted revenue valuation

book value

funding

debt financing

Raising capital through borrowing

convertible debt · crowdfunding · IPO · term loan · revolving credit · bridge financing · seed funding

Opposites
financial return vs. financial expense

cost of capitalreturn on investment

Profit relative to cost

investment returns · capital gains · profit margin · net income · free cash flow

capital scarcity vs. capital abundance

cost of capitalfree money

easy money · grant funding · quantitative easing

Family

cost, costs, costing, costly, costliness, capital, capitals, capitalism, capitalist

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