资本成本vs Cost of Equity
Companies require capital to start up and run business operations. Capital maybe obtained using many methods such as issuing shares, bonds, loans, owner’s contributions, etc. Cost of capital refers to the cost incurred in obtaining either equity capital (the cost incurred in issuing shares) or debt capital (interest cost). The following article takes a closer look at the concept cost of capital and cost of equity; one of the 2 major components that make up the cost of capital. The article clearly explains these concepts and points out their similarities and differences.
资本成本
Cost of capital is the total cost in obtaining debt or equity capital. Cost of capital is the manner in which a company raises cash either through issuing stock, borrowing funds, etc. The cost of capital is the return that is needed by investors for providing capital to the firm, and this acts as a benchmark that new projects need to meet in order for the project to be considered. In order for an investment to be worthwhile, the rate of return on the investment must be higher than the cost of capital.
举例来说,两项投资的风险水平,投资A和投资B是相同的。对于投资A,资本成本为7%,回报率为10%。这提供了3%的超额回报,这就是投资应通过的原因。另一方面,投资B的资本成本为8%,回报率为8%。在这里,没有产生的成本回报,不应考虑投资B。但是,假设国库券的风险水平最低,回报率为5%,这可能比两种选择都更具吸引力,因为风险水平非常低,并且保证了5%的回报,因为T票价是政府政府发布。
Cost of Equity
股本成本是指投资者/股东要求的回报,或投资者期望对公司股票进行股权投资的赔偿金额。股本成本是一项重要措施,并允许公司确定应向投资者支付多少款项,以支付的风险水平。股本的成本也可以与其他形式的资本(例如债务资本)进行比较,债务资本将允许公司确定哪种形式的资本最便宜。公平成本计算如下。
Es= RF+βs(RM- rF)
In the equation, Esis the expected return on the security, RFrefers to the risk free rate paid by government securities (this is added because the return on a risky investment is always higher than government risk free rate), βs指的是对市场变化的敏感性,RMis the market rate of return, where (RM- rF) refers to the market risk premium.
资本成本vs Cost of Equity
Cost of capital is comprised of two components; cost of equity and cost of debt. It is also the opportunity cost (return that could have been earned) in investing in another project with similar risk levels. When deciding between investments of similar risk levels, an investment should only be made if the return is higher and cost of capital is lower than the alternative. The major difference between cost of capital and cost of equity is that, cost of equity is the return required by the shareholders to compensate for the risk taken to invest in shares and cost of capital is the total return required from the investment in securities (debt and equity both).
Summary:
Difference Between Cost of Capital and Cost of Equity
• The cost of capital is the return that is needed by investors for providing capital to the firm, and this acts as a benchmark that new projects need to meet in order for the project to be considered.
• Cost of equity refers to the return that is required by investors/shareholders, or the amount of compensation that an investor expects for making an equity investment in the firm’s shares.
• The major difference between cost of capital and cost of equity is that, cost of equity is the return required by shareholders to compensate for the risk taken to invest shares and cost of capital is the total return required from the investment in securities (debt and equity both).
发表评论