The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile. Cost of capital includes the cost of debt and the cost of equity.

Investopedia Says:
The cost of capital determines how a company can raise money (through a stock issue, borrowing, or a mix of the two). This is the rate of return that a firm would receive if it invested in a different vehicle with similar risk.

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CAPM helps you determine what return you deserve for putting your money at risk. The Capital Asset Pricing Model: An Overview
Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality. Investors Need A Good WACC
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Looking for a formula to determine whether a company is creating wealth? Time to learn all about economic value added. All About EVA

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