Definition of cost of capitalin analyzing the cost of, Ask an Expert

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Definition of cost of capital

In analyzing the cost of capital it is presumed that business risk of the firm remains unchanged (i.e., that projects accepted don't affect the variability of firm's sales revenues). This assumption eliminates the need to consider changes in cost of specific sources of financing resulting from changes in business risk. Definition of the cost of capital developed is valid only for projects that don't change the firm's business risk.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9581124

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