Question

Cost of capital and explain its relevance from the perspective of capital budgeting and capital structure

Answer 1

Generally cost of capital is the discount rate used in evaluating the desirability of the investment project. In calculating the net present value of the expected future cash flows from the project, the cost of capital is used as the rate of discounting.

Answer 2

Generally cost of capital is the discount rate used in evaluating the desirability of the investment project. ... In calculating the net present value of the expected future cash flows from the project, the cost of capital is used as the rate of discounting.