Estee Lauder Companies' stock was sold by a variety of institutional investors in the last quarter, including Fred Alger Management Inc., American Century Companies Inc., Brown Advisory Inc., Renaissance Technologies LLC, Credit Agricole S A, Robeco Institutional Asset Management B.V., TIAA CREF Investment Management LLC and Montag & Caldwell LLC.
DEFINITION of 'Cost Of Capital'. The cost of funds used for financing a business. Cost of capital depends on the mode of financing used â it refers to the cost of equity if the business is financed solely through equity, or to the cost of debt if it is financed solely through debt.ince the cost of capital represents a hurdle rate that a company must overcome before it can generate value, it is extensively used in the capital budgeting process to determine whether the company should proceed with a project.
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).