Page 8 - PowerPoint Presentation
P. 8
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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