Marginal Cost of Capital

Marginal Cost of Capital:

It is the cost of raising one more unit of capital. When company raises more capital, cost of capital will too raise. Assume, your cost of capital is 10% (i.e., average) for rising from share capital, debt and public deposit. However if you are interested to increase one more dollar, you have to reimburse additional cost and this cost will be the marginal cost of capital.

When company is raising fund via issuing new equity shares, subsequent schedule of marginal cost of capital will apparent this concept.

869_marginal cost.jpg

When company has adequate retained earnings, then company can utilize this. With this, weighted average cost it will be almost equivalent to marginal cost of capital. Now, question is how to compute marginal cost of capital. For computing marginal cost of capital, we observe both our present cost of capital and risk level. We have to provide high cost of capital when we use this money for uncertain project.

Latest technology based Finance Online Tutoring Assistance

Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Finance help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Finance, project ideas and tutorials. We provide email based Finance help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Finance. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Finance Homework help and assignment help services. They use their experience, as they have solved thousands of the Finance assignments, which may help you to solve your complex issues of Finance. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.