Incremental Cost of Capital

Glossary

Banking

Incremental Cost of Capital

A company’s incremental cost of capital is the average cost of issuing new debt or equity. Measuring it can help companies make financing decisions that lower the weighted average cost of capital. It is also useful to determine if a new project is worth financing at all or if it is, whether it should issue debt or sell new equity. For investors, it is a useful metric as it may signify broader business-related issues.

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