Cost of capital is the opportunity cost of investing the same amount of cash into different investment opportunities, with the real cost of capital the amount of money that could have been earned by choosing one investment over the other. The cost of capital is tied to the opportunity cost of pouring cash into a specific business project or investment. Once those costs are evaluated, businesses can make better decisions to deploy their capital to maximize profit potential.

It was mentioned investing the same amount of cash into different investment opportunities above. What cash amounts are you referring to?