Page 37 - 5.2 i. Manac Finance ITC Summarised Notes
P. 37

COST OF CAPITAL




            Overview







            • Remember that the cost of capital for the company is

                merely a mirror image of the fair rate of return required by
                the investor.





            • Interest paid by the company = interest received by the
                investor.





            • Dividends paid by the company = dividends received by the
                investor.





            • WACC represents the return that a company needs to

                achieve in order to fully compensate the debt and equity
                providers of the company (it is the cost to finance the

                company).


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