Question

Cost of capital and capital structure are interrelated? Comment

Answer 1

Capital structure is used to represent the source or sources of funds utilized by a company to raise money for its growth.

Each fund for which the source is represented in the capital structure is associated with a cost required to raise it. This cost is known as cost of capital.  

An ideal capital structure helps in reducing the cost of capital and enhancing the value of the company at the same time.