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The cost of the capital metric is used by companies internally to judge whether a capital project is worth investing, and by investors who use
The cost of the capital metric is used by companies internally to judge whether a capital project is worth investing, and by investors who use it to determine whether an investment is worth the risk compared to the expected return. The cost of capital depends on the mode of financing used. In a low-interest-rate environment, such as at the present what mode of financing would you choose as a manager for your firm, if they are very soon planning to invest in a new US$ 500 million production facility in the state? Discuss with rationale.
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