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 weighted average cost of capital is the average interest rate a company must pay to finance its assets. As such, it is also the minimum average rate of return it must earn on its current assets to satisfy its shareholders or owners, its investors, and its creditors.ACC = .50(5.85) + .50(6.5) = 6.175%. If your company uses debt and equity financing in the way suggested above, the company's weighted average cost of capital will be 6.175%. If you add other sources of financing, you will need to add their component costs, such as that for new equity or preferred stock.