In the practice of enterprise financing, the relative number of capital cost is usually adopted, that is, the capital cost rate. Expenses in financing expenses refer to the price paid by using funds, such as dividends paid to shareholders or interest paid to creditors.
The cost of capital can be used in many forms:
First, when comparing various financing methods, use individual capital costs, such as loan capital cost rate, bond capital cost rate, common stock capital cost rate, preferred stock capital cost rate and retained earnings capital cost rate;
The second is to use the comprehensive capital cost rate when making decisions on the capital structure of enterprises;
Third, the marginal capital cost rate is used when making additional financing structure decisions.