ON THE COST OF CAPITAL

This work does not necessarily prove or disprove anything. It is an exposition of the current body of more or less accepted thinking on the subject of cost of capital. It is partly an exposition of the logic of the thinking, but it is primarily an exposition of its importance in the context of the world in which this thinking is used.

The cost of Capital is closely related to the capital investment decision. Two investment evaluation methods predominate (in the literature): The present value...