INCREMENTAL COST OF CAPITAL Definition

INCREMENTAL COST OF CAPITAL is the weighted cost of the additional capital raised in a given period. Weighted cost of capital, also called composite cost of capital, is the weighted average of costs applicable to the issues of debt and classes of equity that compose the firm's capital structure. Also called marginal cost of capital.

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DISCRETIONARY COST can be increased or decreased at the discretion of the decision maker (e.g., advertising and business travel).

MONETARY UNIT is the unit used to measure economic activity (e.g., U.S. $).

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