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COST OF CAPITAL
Marginal cost of capital
Example:
The company currently has a balance of R1 200 in retained earnings and wants to invest in a new
project with a cost of R3 000.
Assume that the cost of new equity is 19%.
The current WACC:
= 18% (12 000/20 000) + 12% (2 000/20 000) + 8% (6 000/20 000)
= 14.4%
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