Question

Cost of capital and capital structure decisions are interrelated??comments

Answer 1

An ideal capital structure helps in reduction of the cost of capital. In this situation the company raises funds to finance its operations and growth. Each of these sources have a cost associated with them. So cost of capital is cost of raising funds from various sources.
The cost of capital plays a very important role in deciding the capital structure of a company. and also in the capital budgeting decisions, as it is comprised of: 
1. Cost of debt
Cost of preferred equity i.e preference shares
2. Cost of common equity i.e equity shares.

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Answer 2

The capital structure of a company is very important in calculating its cost of capital.  With careful analysis and determination of the capital structure, it is possible to lessen the cost of capital of the company and also increase its value at the same time.

Both cost of capital and capital structure have a direct impact on the well-being of a company. They have to be related to the business activities of the company productively to avoid its failure.