Answer to Question #270058 in Accounting for Nhlaphu

Question

With reference to financial management, write a short essay on the concept of cost of capital as a key fundamental in respect of managers’ maximising corporate value for shareholders. Maximum 600 words and include references.

Answer 1

The rate of return a company expects to receive on its investment in order to raise its market value is known as the cost of capital. In other words, it is the rate of return that capital suppliers want as compensation for their capital input.