What do you understand by the term composite cost of capital?

[Onachukwu]

Composite cost of capital is also referred to as weighted average cost of capital (WACC). It is a calculation of a company's cost of capital that involves the proportional weighting of each category of capital.

 

[Sariana23]

The cost of capital is the cost incurred by a company to finance its investment projects through its own financial resources. Its purpose is to include in a single figure the cost of the different sources of financing that a company will use to fund a specific project.

 

[Dowenship]

Simply put, the weighted average cost of capital is indicative of the composite cost of capital. Such parameters as the debt, preferred stock and common stock are reflected in the eventualities of the composite cost of capital. Essentially, its purpose is to highlight the cost of each additional capital against the backdrop of the average capital cost.

The composite cost of any capital is the average cost of the capital it also highlight the cost of additional capital. I believe this is in measures in some business but not all probably because they don't know about it.

 

[Samuel77]

Composite cost of capital is the amount which the company use in financing the business and can also be referred to as a particular money use to renovating the business

 

[Psalmseen]

Composition cost of capital has lots of definition though. Some sees it as the cost of borrowing but nevertheless, the meaning of the very term is ambiguous

 

[Setho]

The composite cost is very important thing to know in your business. It is the total sum of money that is used to run a business and its in relation with the capital. When it increases than it means you should prepare for some financial loses.

 

[Ehizzy1]

Composite cost of capital simply put is a business' total required return. It indicates the opportunity cost involved when an investor decides to take on the risk of investing in a business.
Businesses use the composite cost of capital to assess the value of investments and the ones worth pursuing.

Thanks for the clarification because the term looks very strange to me ,because i have not heard about such name before i think i will still do my own research

 

[Richard92]

As the name implies composite cost of capital is this to my own understanding is the amount of interest in acquiring a loan for a particular business.

 

[Victor72]

As for me I believe the composite cost can be the extra amount of money added as an interest to the money you are about to borrow or interest rates

 

[Senator]

Composite cost of capital should be the total actual cost a company has invited in the running of the entire business enterprise. This is huge

 

[Adventurer]

Composite cost refers to a business cost of obtaining capital. It is a combination of the weighted cost of debts and the addition of that of equity to it. In simpler terms, it is what a company spends in a bid to get those funds required to run it operations. It is unavoidable because capital must be generated if the business is to be sustained.

Thanks out of all the explanations yours was quite easy for me to understand as I've not heard of this term, so it's the cost that a business uses to aquire it's capital, so why can't it be part of the capital? Why is it termed a different name?

 

[nimzy]

composite cost of capital can be seen in different perspectives and can also be seen as a company cost to finance it business determine by and also referred to as weighted average.

 

[Bousine123]

Thanks so much for the insight my friend. Most of these terms are what I find really difficult to comprehend in my day to day business activities.

 

[tuna89]

They are numerous definition to this depending on the business
Composite cost of capital is a company's cost to finance its business, determined by and also referred to as "weighted average cost of capital" or WACC. ... A company's debt and equity, or its capital structure, typically includes common stock, preferred stock, bonds, and any other long-term debt.

Thanks a lot for the enlightenment, now I can relate with the definition, this is a major part of every business establishment and must be taken seriously

 

[Kaffyfolla]

Composite cost of capital is a company's cost to finance its business, determined by and also referred to as "weighted average cost of capital" or WACC. Composite cost of capital is calculated by multiplying the cost of each capital component by its proportional weight.

 

[Grandeur]

Composite cost refers to back up cost, that is any other source of income for a business after it has exhausted its primary source of income example of composite cost could be tax etc

 

[tyrim88]

composite cost is actually the capital dept and share capital and equity of a company,it will in the long run have an effect on the company based on the performance of the organisation.

 

[Smiles20]

There are some things that you will have to buy them once and then you are going to be using them as the business is progressing and you can be referred to them as.

 

[Ronald]

Simply put, the weighted average cost of capital is indicative of the composite cost of capital. Such parameters as the debt, preferred stock and common stock are reflected in the eventualities of the composite cost of capital. Essentially, its purpose is to highlight the cost of each additional capital against the backdrop of the average capital cost.

Composite cost of capital is a company's cost to finance its business. In other words, it is the combined cost of the different sources of capital needed to fund a business.

 

[Kvngsammy]

A lot of useful comments which I've really loved and would be helpful in my journey have been picked up as I never heard of this terminology before now
Kudos to @alexander for this forum, a lot of things I've been exposed to