Cost of Capital

3. The gain investors expect for supplying funds to a company.
7. The incremental cost a firm incurs when raising new capital.
9. The annual percentage rate (I) paid to creditors.
11. The proportion (wd or we) of a specific source in the capital structure.
12. The cost associated with a specific individual source of capital.
13. The total mix of debt and equity used to fund a business.
14. This adjustment (1-T) is applied to debt because interest is deductible.

1. Capital (kd) raised through bonds or bank loans.
2. A type of share that sits between debt and equity in the capital mix.
4. The cost (ke) of ownership capital, which is often the most difficult to determine.
5. WACC is a pivotal tool used in this process to determine a company's worth.
6. WACC is used as this type of factor to find the present value of cash flows.
8. Investors demand a higher return to compensate for higher levels of this.
10. The overall average rate a company pays to finance its operations.
11. This is created when a project's return is higher than the WACC.