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Factors Determining The Firm'S Cost Of Capital

Author

Listed:
  • Marioara Mirea
  • Nicoleta Asalos
  • Aivaz Kamer Ainur

Abstract

This study is ready to connect the firm's investment decisions with its financing decisions. The cost of capital provides this fundament al connecting link. The term cost of capital may be used interchangeably with the firm's required rate of return, the hurdle rate, the discount rate, and the firm's opportunity cost of funds. This study is about the concepts behind the cost of capital, as well as the procedures for estimating the firm's cost of capital. For the most part, we will assume a constant debt-to-equity mix when computing a company's cost of capital.

Suggested Citation

  • Marioara Mirea & Nicoleta Asalos & Aivaz Kamer Ainur, 2007. "Factors Determining The Firm'S Cost Of Capital," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(9), pages 1-33.
    • Handle: RePEc:alu:journl:v:1:y:2007:i:9:p:33
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    More about this item

    Keywords

    the cost of capital; financial decisions.;

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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