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InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

Cost of capital  

Definition 1.

The required return for a capital budgeting project.
 

Definition 2.

The required return necessary to make a capital budgeting project worthwhile. Cost of capital would include the cost of debt and the cost of equity.
 

Definition 3.

The opportunity cost of an investment, i.e. the rate of return that a company would otherwise be able to earn at the same risk level as the investment that has been selected.
 

Definition 4.

The rate that a company must pay for its capital or the minimum return that is required to maintain the market value of a company's common stock. Cost of capital reflects the market's perception of the risk associated with a company's common stock.
 
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