Professional Documents
Culture Documents
Cost of Capital
Cost of Capital
• The concept of the cost of capital is key information used to determine a project's
hurdle rate.
• A company embarking on a major project must know how much money the project will
have to generate in order to offset the cost of undertaking it and then continue to
generate profits for the company.
• Cost of capital, from the perspective of an investor, is an assessment of the return that
can be expected from the acquisition of stock shares or any other investment.
• This is an estimate and might include best- and worst-case scenarios.