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Corporate Finance

Understanding Marginal Cost of Capital

Very Easy Cost Of Capital Marginal Cost Of Capital

In corporate finance, the marginal cost of capital refers to the cost of obtaining additional capital, typically in the form of debt and equity.

Which of the following statements best describes the marginal cost of capital?

It is the average cost of capital calculated over several financing projects.

It is the cost of raising an additional dollar of capital.

It is the cost of debt only, not including equity.

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