The cost of capital is the return, expressed in terms of an interest rate, required by an organization to finance its activities. It can vary depending on the types of capital employed, such as equity share capital or loan capital. A unique weighted average cost of capital (WACC) is often computed for each organization based on their specific mix of capital sources. The cost of capital is frequently used as a hurdle rate in discounted cash flow calculations.
Equity Share Capital refers to the portion of a company's capital that is raised in exchange for shares, representing ownership stakes in the company. This differs from non-equity shares which may include debt or preferred stock.
