ALTERNATIVE CONCEPTUAL AND DETERMINATIONS OF THE COST OF CAPITAL

Ecaterina Surupaceanu
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Ecaterina Surupaceanu: University of Craiova Faculty of Economics and Business Administration

Annals of University of Craiova - Economic Sciences Series, 2011, vol. 3, issue 39, 144-151

Abstract: The cost of capital is the result of two behaviors, one being that of the entrepreneur and the investor second. These behaviors converge in a common point, namely the maximization of enterprise value. Cost accounting reflects cash expenses actually incurred by the enterprise and the economic cost also includes those expenses that do not involve payments to third parties, such as labor consumption of the owner company. In general the cost of capital is highlighted in terms of the entrepreneur (entity) who, at closest'' by issuing shares, or the decision to distribute profits to, and reserves. Equity cannot be removed by the cost impact of which is reflected in the development of the company's business. Research aimed at a less discussed issue both theoretically and in practice. Therefore, equity is the part of capital held by the developer on which to exercise their ownership, because it belongs to the shareholders and build upon the outcome of such capital mobilized. He belonged to either a person or an economic entity.

Keywords: critical; the cost of capital, land, capital and labor, cost of equity, equity capital (search for similar items in EconPapers)
JEL-codes: M41 M42 (search for similar items in EconPapers)
Date: 2011
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