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.
Mean adjusted by significance
- discount rateInterest on Fed loans
- hurdle rateMinimum required return percentage
- financial modelingMathematical business performance representation
- corporate financeFirm funding and investment strategy
net present value · retained earnings · dividend yield · financial leverage
Greek alphabet's second letter
- volatilityRapid, unpredictable changeability
- risk premiumExtra yield for uncertainty
- market riskExposure to price fluctuations
- credit riskPotential for borrower nonpayment
creditworthiness · credit rating · spread · downgrade · solvency · exposure · hedging · diversification
Time-adjusted revenue valuation
- present valueCurrent equivalent of future sum
- intrinsic valueWorth independent of circumstance
- fair valueReasonable exchange price
- book valueAsset minus accumulated depreciation
Raising capital through borrowing
- private equityCapital for unlisted companies
- angel investmentPrivate funding for startups
- bank loanBorrowed money from lender
- convertible debtLoans convertible to stock
crowdfunding · IPO · term loan · revolving credit · bridge financing · seed funding
weighted average
Mean adjusted by significance
- discount rateInterest on Fed loans
- hurdle rateMinimum required return percentage
- financial modelingMathematical business performance representation
corporate finance · net present value · retained earnings · dividend yield · financial leverage
beta
Greek alphabet's second letter
- volatilityRapid, unpredictable changeability
- risk premiumExtra yield for uncertainty
- market riskExposure to price fluctuations
credit risk · creditworthiness · credit rating · spread · downgrade · solvency · exposure · hedging · diversification · inflation risk
discounted cash flow
Time-adjusted revenue valuation
- present valueCurrent equivalent of future sum
- intrinsic valueWorth independent of circumstance
- fair valueReasonable exchange price
debt financing
Raising capital through borrowing
- private equityCapital for unlisted companies
- angel investmentPrivate funding for startups
- bank loanBorrowed money from lender
convertible debt · crowdfunding · IPO · term loan · revolving credit · bridge financing · seed funding
cost of capitalreturn on investment
Profit relative to cost
investment returns · capital gains · profit margin · net income · free cash flow
cost of capitalfree money
cost, costs, costing, costly, costliness, capital, capitals, capitalism, capitalist