The Cost of Capital (also known as hurdle rate) is an important concept in capital budgeting. It is a company's calculation of the minimum return that would be necessary in order to justify undertaking a capital budgeting project, such as building a new factory. This is one of the most important concepts in finance which is used by businesses to analyze financial decisions and how to make the most of their capital.Cost of capital is a company's calculation of the minimum return that would be necessary in order to justify undertaking a capital budgeting project, such as building a new factory. Learn more about the cost of capital formula, why it's important, how to calculate it and how it's used.Every business owner wants to be able to make a profit. The more profit you can make the better your company will be doing. One way to help increase your profit is to control the costs of your business. Cost of capital is one of the major components of a business's cost of doing business. This blog will look at what cost of capital is and how you can calculate it.
