marginal cost of capital

Definition

The cost associated with raising one additional dollar of capital. The marginal cost will vary according to the type of capital used. For example, raising funds through the use of unsecured or subordinated debt, or through debt that requires higher interest rates to offset risk, will be more expensive than debt that is backed by collateral, such as a secured bond.

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There was a marginal cost of capital and we had to keep an ye on it because it was quite important to us.

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Most businesses will struggle in their first years to realize the marginal cost of capital and earn a profit for their shareholders.

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Jones had figured out that the marginal cost of capital was going to be $15 and he didn't know if his business could sustain such an investment.

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marginal cost hurdle rate