Demystifying the Cost of Capital Understanding Debt, CAPM, and WACC

The cost of capital is defined as the rate of return required for different types of financing, whether debt or equity. The podcast explains how to calculate the cost of debt and how to use the CAPM model to determine the cost of capital (equity). It also introduces the WACC model, which calculates a weighted average cost of capital. The conclusion is that the CAPM model is the most appropriate method to determine whether a project should be accepted or rejected, while relying on WACC can lead to incorrect decisions. Hosted on Acast. See acast.com/privacy for more information.