Depending on the capital: i.e. Let's say the capital is a product of your firm such as hammers. To determine the marginal cost, you have to figure out how much it costs to produce 1 unit (or hammer). To determine this, you divide the Total Cost (which is the sum of Total fixed Costs and Total variable costs) by the quantity of units that you are producing. Therefore, if your total cost equals $1000, and you produce 50 hammers, then your marginal cost is $20 because it costed you $20 per hammer.
The marginal cost of capital (MCC) is the cost of the last dollar of capital raised, essentially the cost of another unit of capital raised. As more capital is raised, the marginal cost of capital rises.
Marginal or incremental cost of capital is cost of the additional capital raised in a given period
Marginal revenue/margina utility return from capital represents the benefit of capital. When determining the optimal amount of capital, we must take into account the point when marginal benefit = marginal cost. This optimises profit/utility.
This is because if a marginal figure is less than an average figure, the new average figure will decrease.
Take the first-order derivative of the cost of capital function.
Weighted average cost of capital includes cost of debt and cost of equity. Thus irrespective of existing proportion of debt and equity, the marginal cost is always applicable.
Using a hurdle rate can help take the emotion out of defining capital value. This is the advantage of using the marginal cost of capital as the hurdle rate.
because of deprecation
the marginal cost of capital "B"
Marginal cost is
Marginal cost is total cost/quantity Marginal benefit is total benefit/quantity
Marginal cost comes from the costs of producing just one more of something.