How is cost of capital the required return?

how can the lenders/owners RETURN be our COST??? why is such name given to their expected return?
Replies (2)

When you view it from the investor's/lender's perspective, dividend/interest is a return. But from the company's point of view, such dividends/interest are costs borne by the company for availing of funds in the form of equity capital/loan. Rate of return and cost of capital actually mean the same thing but given different terminologies based on the different perspectives of the investor/lender and the company. To make it even more clear, lets take a simple example where mr.A sells a product to Mr.B. For Mr.A it is a sales which is credited in his books but for Mr.B it is a purchase which is debited to his books of accounts. Here the same transaction is termed as both sales and purchases based on the different point of views of parties A and B..

Great! Thanks a lot !!

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
30 September 2026
Senior Accountant

Codeboard Technology

Chennai

B.Com

View Details
Company
30 September 2026
Senior Accounts Executive

Codeboard Technology

Chennai

MBA

View Details
Company
ARTICLESHIP 16 September 2026
Article Assistant

MANUJ SHARMA AND COMPANY

Noida

CA Inter

View Details
Company
ARTICLESHIP 28 September 2026
Junior Accountant

J S P M & Associates LLP

Pune

B.Com

View Details
Company
ARTICLESHIP 07 October 2026
Article Assistant

Malhotra Rajesh & Associates

New Delhi

B.Com

View Details
Company
ARTICLESHIP 21 September 2026
CA Article Assistant

KK & Company Chartered Accountant

Pune

CA Inter

View Details
Company
07 October 2026
Senior Account Manager

Amplio Invest

Mumbai

M.Com

View Details
Company
16 September 2026
Internal Audit - Team Lead

Consulting & Beyond

Chennai

CA

View Details