What is the cost of capital? What is the difference between the capital cost rate and the discount rate?

Cost is the core concept in financial processing, which has a core meaning in many aspects. Occasionally, it is possible to plan the cost-expense ratio by moving the discount rate, so what is the difference between the two? This will report the common sense of the relationship between your capital cost and capital cost rate. Let's have a look.

What is capital?

Capital refers to the price that an enterprise spends to raise and use capital. Broadly speaking, enterprises have to pay a price for raising and using any capital, which is not overdue, but still long. In a narrow sense, capital only refers to the capital that raises and uses long-term capital (including self-owned capital and borrowed long-term capital). Because long-term capital is also called capital, long-term capital capital is also called capital capital.

Cost is a key concept in financial processing. First of all, capital is the rate of return required by investors (including shareholders and creditors) of an enterprise for the capital invested in the enterprise; Secondly, cost is the opportunity cost without the name of cost (or original enterprise).

Classification of capital cost

Part cost refers to the cost rate of long-term capital of an enterprise, including common stock equity currency, income preservation cost, long-term borrowing cost, bond cost, etc. Enterprises will use some capital when comparing various financing methods.

Weighted equilibrium cost refers to the weighted equilibrium cost ratio of long-term capital of all enterprises. When enterprises hold a long-term cost structure strategy, they use authorization to balance capital.

Marginal cost refers to the right of enterprises to raise long-term capital to balance the cost-expense ratio. Enterprises use marginal capital when they hold the strategy of raising funds.

What is the cost-expense ratio?

Cost-expense ratio refers to the ratio between the amount of capital spent by a company and the amount of effective financing, usually expressed as a percentage. In the company's financing business, the relative number of costs is often used to calculate the cost-expense ratio. Capital expenditure in financing expenditure refers to the price paid by using capital, dividends paid to shareholders or capital paid to creditors.

The cost-cost ratio is used as the discount rate.

When the harm of the name is caused by the balance of the temporary property of the enterprise and the cost structure of the name is caused by the temporary cost structure of the enterprise, it is appropriate to use the temporary cost to move the discount rate of the name.