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English definition of “cost of capital”

cost of capital

noun [S]
 
 
ECONOMICS, FINANCE the amount of money that a company must pay out in dividends to it shareholders, and in interest on bonds and other loans: British biotechs now find themselves with less flexibility and a higher cost of capital. Determining the cost of capital allows you to calculate what return on investment is necessary to compensate you for the risk you are taking.
(Definition of cost of capital from the Cambridge Business English Dictionary © Cambridge University Press)
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