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### Cost of capital

Cost of capital is the cost rate of the funds that the company uses as its capital, therefore the rate that mixes costs of various sources of finance. It usually has the form of Weighted Average Cost of Capital (WACC), but all the components mentioned below can be also called with the broader term &

### Cost of equity

Cost of equity (COE) is: the return required by the shareholders the component of cost of capital (WACC) Cost of equity can be calculated by using several methods, each of which may result in different cost of equity rates: CAPM – Capital Asset Pricing Model Dividend discount model

### Cost of retained earnings

Retained earnings are the profit that has not been distributed to shareholders and it is certainly not for free.  It is the money that could have been paid out as dividend, but was not – probably due to the fact that the stockholder was not able to achieve better return on investments tha

### Cost-benefit analysis (CBA)

Cost-benefit analysis (CBA) is the analysis that is used to summarize and evaluate costs and benefits relevant with certain decision, project or investment. The main stress is on monetary costs and benefits, but non-monetary ones shall also not be neglected. The monetary effects are often discounted

### Gordon growth model (Dividend discount model)

Gordon growth model (Dividend discount model) uses the assumed relationship of the constantly growing dividend amount received in perpetuity and the share price and is used to (39):   calculate market value of share (equity) = present value of future dividends P0 = D1 / (Ke – g) &n

### Cost of debt

Cost of debt is: the return required by the debtholders the component of cost of capital (WACC)   Cost of debt is the interest paid reduced by the tax deduction on the interest.    Cost of debt is calculated separately for each type of debt: irredeemable debt redeemable

### Marginal cost of capital (MCC)

Marginal cost of capital (MCC) is the rate calculated based on the same formula as WACC, but compared to WACC considers both the existing capital finance as well as all the effects of undertaking the project.   Therefore, there are two adjustments to traditional WACC to obtain MCC recalcul

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