Cost: Cost is that amount of money to which a company spends for the production of goods. Cost is a monitory valuation of material, resource, time, expenses of production and delivery. Cost of Capital: The cost of capital refers the investment amount on which the return will be generated and to cover this cost is necessary for the surplus of the company. Ups and downs of shares of the company depend, how frequently company covers its cost. To Identify: If the firm already has funds, it should ignore the cost of capital or not.

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Chapter 5, Problem 8CC

Summary Introduction

Cost: Cost is that amount of money to which a company spends for the production of goods. Cost is a monitory valuation of material, resource, time, expenses of production and delivery.

Cost of Capital: The cost of capital refers the investment amount on which the return will be generated and to cover this cost is necessary for the surplus of the company. Ups and downs of shares of the company depend, how frequently company covers its cost.

To Identify: If the firm already has funds, it should ignore the cost of capital or not.

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