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

[Braga13]

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.

 

[giddy]

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.

 

[WhiteHouse]

Also known as the weighted average cost of capital (WACC), a composite cost of capital is a company’s cost to borrow money given the proportional amounts of each type of debt and equity a company has taken on.

WACC= Wd (cost of debt) + Ws (cost of stock/RE) + Wp (cost of pf. Stock)

 

[Alexandoy]

Pardon me for this comment but it looks like this thread has been copied in the search engine although I agree that the sentences were paraphrased. Anyway, for the benefit of the laymen here composite cost is the average cost of the business which is directly connected to the capital. When the composite cost is moving upwards to be greater than the capital then the business may be experiencing a financial shortage.

 

[Holluwaphemmy]

Also known as WACC is the average cost of business linked to capital. It is the tendency of a company to borrow money i.e a company's cost to borrow money given to the proportional amount of debt the company owe

 

[Kinglegend01]

I dont actually know the meaning of this so I just pasted a google explanation.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".Composite cost of capital is calculated by multiplying the cost of each capital component by its proportional weight. A company's debt and equity, or its capital structure, typically includes common stock, preferred stock, bonds, and any other long-term debt.

 

[MastetG]

Cost of capital is the required return necessary to make a capital budgeting project, such as building a new factory, worthwhile. When analysts and investors discuss the cost of capital, they typically mean the weighted average of a firm's cost of debt and cost of equity blended together.

 

[WhiteHouse]

Composite cost of capital is an organization's expense to back its business, controlled by and furthermore alluded to as "weighted normal expense of capital" or WACC. ... An organization's obligation and value, or its capital design, ordinarily incorporates normal stock, favored stock, securities, and some other long haul obligation.

 

[Usman Sattar]

Who is this Financial Dictionary for.
We have developed this Financial Dictionary that could be used by anyone for free on our website. We have provided the meanings of almost all the financial terms along with the context in which they can be used. If you have lingering doubts on any financial term, then all you must do is log on to our website and check out the Financial Dictionary.

 

[Trojan8]

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.

 

[Ridorz]

In my perspective, what I understand about a composite cost of capital is that a composite cost can be regards as a amount of money that used to finance a business by company, it's a debt or equity of business. It is a weight averages of cost capital that estimated to evaluate the business financial.

 

[Seun4luv]

Understanding Cost of Capital. Cost of capital represents a hurdle rate that a company must overcome before it can Composite cost of capital is also known as weighted average cost of capital which is a measurable unit.

 

[Presido]

The composite cost of capital is the cost of a company's fund (both debt and equity), it is also the rate of return on a portfolio company's existing securities. It is used to evaluate new projects of a company.

 

[Smithkid]

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

 

[Caali]

The cost of capital for a firm tells you how much it costs for a firm to secure funding. Think of interest rates for instance. That’s a cost of debt capital. There’s also a cost of equity capital, which is about the costs raising via the secondary markets.

 

[Blue house]

Composite cost of capital is an organization's expense to back its business, controlled by and furthermore alluded to as "weighted normal expense of capital" or WACC. ... An organization's obligation and value, or its capital construction, normally incorporates basic stock, favored stock, securities, and some other long haul obligation.

 

[Kehinde]

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.

 

[Diamond07]

Composite cost of capital is also referred to as weighted average cost of capital. It is a calculation of a company's cost of capital that involves the proportional weighting of each category of capital. It takes into account all sources of capital, such as common and preferred stock, bonds, and other forms of long-term debt.

 

[Ralphjoe]

Composite cost of capital is the cost a company incurred in the process of getting capital to find it's business or other project. These cost may include transportation cost, documentation cost, fees and tax e.t.c. These whole cost make up the composite cost of capital

 

[Shayo]

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.