Cost of Capital

Definition: Cost of Capital is the amount, expressed as an annual percentage, that a firm must pay to obtain adequate funds (money) to finance its business and/or its operations.
The Cost of Capital is the weighted sum of the:
- Cost of Equity (regular shares)
- Cost of Preferred Stock (special shares)
- Cost of Debt (borrowings)
There are many different sources (types) of capital: traditional debt or equity financing or owner financing, grants, gains on investment capital, retained earnings, accrual financing contracts and forward payment agreements on capital.
See also WACC.

More on cost of capital.
More on investing: Asset Management, Break-even Point, BRIC Countries, Capital Structure, Corporate Bond, more...

MBA Brief offers brief, yet very accurate definitions of MBA concepts, frameworks, methods and models. We keep it short and provide some links in case you'd like to learn more around a subject.