Posted By:Krishna Jani
Updated: 19 July, 2023Published: 11 July, 2023
Reading Time: < 1 minute

The minimum return a business must achieve before creating value is known as the cost of capital. A company must at the very least make enough money to cover the cost of the capital it uses to fund its operations before it can start to make a profit. This includes the costs of both the equity and debt used to finance a business. The capital structure of a company and the type of financing it chooses to use have a significant impact on the cost of capital, and the business may use a mix of debt and equity, or it may rely solely on equity or debt.

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