Cost of capital

In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or from an investor's point of view is "the required rate of return on a portfolio company's existing securities".^[1] It is used to evaluate new projects of a company. It is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.

^ Brealey, Myers, Allen. "Principles of Corporate Finance", McGraw Hill, Chapter 10

[1] Brealey, Myers, Allen. "Principles of Corporate Finance", McGraw Hill, Chapter 10

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