Views expressed in this publication are not necessarily those of the Department of Defense. Although some of the commonly referenced resilience constructs are outlined below, it is difficult to. say whether they are all valid and reliable factors due to the way in which resilience was defined in. the various studies.
In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view the required rate of return on a portfolio company's existing securities.It is used to evaluate new projects of a company.his means, for instance, that the past cost of debt is not a good indicator of the actual forward looking cost of debt. Once cost of debt and cost of equity have been determined, their blend, the weighted average cost of capital (WACC), can be calculated.
The cost of capital can be calculated in a number of ways, but for the purpose of this article we will be using the weighted average cost of capital (WACC). This method is comprised of 3 key components: (1) dollar cost of debt, (2) dollar cost of preferred stock, and (3) dollar cost of common stock.The below formula details how to calculate the cost of capital for a company.The cost of capital is comprised of three key risk components: (1) risk free rate of return, (2) business risk premium, and (3) financial risk premium. The risk free rate of return is an investment completely free of risk (i.e. Treasury Note).he below formula details how to calculate the cost of capital for a company. The cost of capital is comprised of three key risk components: (1) risk free rate of return, (2) business risk premium, and (3) financial risk premium. The risk free rate of return is an investment completely free of risk (i.e. Treasury Note).