A General Introduction to Risk, Return, and the Cost of Capital

Eva R. Porras

Chapter 1 in The Cost of Capital, 2011, pp 6-42 from Palgrave Macmillan

Abstract: Abstract The cost of capital to a firm is the return1 investors receive on their investments. Therefore, in this context, an investor is anyone who lends money to a firm or agency in exchange for some ‘profit’. The providing of funds to the firm could be done by purchasing some of the company’s common stock, bonds,2 or in a number of additional ways we shall comment on later. The higher the profit desired by the investor, the greater the cost to the firm or paying agency.

Keywords: Discount Rate; Cash Flow; Financial Asset; General Introduction; Free Cash Flow (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-29767-8_2

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DOI: 10.1057/9780230297678_2

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