Appendix 9The Cost of Capital
The cost of capital is an economic indicator that shows the annual rate of return expected by stockholders and creditors in exchange for their investment. It takes different risk factors into account:
- – the inflationary risks linked to currency depreciation;
- – the country-specific risk;
- – the systematic risk;
- – the return on investment.
In the new economic environment, the cost of capital remains the basis for value calculations in methods of assessment and cost models.
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