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What is the marginal cost of capital?

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Answered 2009-04-02 08:46:47

Marginal or incremental cost of capital is cost of the additional capital raised in a given period

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What is the concept of marginal cost of capital?

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.

How do you compute the Marginal Cost of Capital schedule?

schedules of weighted marginal cost of capital

How does marginal revenue and marginal utility relate to capital?

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.

How do you compute marginal cost of capital?

Take the first-order derivative of the cost of capital function.

If a company's debt is low does marginal cost of capital apply?

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.

How do you calculate marginal cost of capital?

i would appreciate your answer. thank you

What is advantage of using the marginal cost of capital as a company's average hurdle rate?

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.

Why is the marginal cost of capital more relevant to making investment decisions than the historic cost of capital?

because of deprecation

What is The average cost associated with each additional dollar of financing for investment projects is?

the marginal cost of capital "B"

How do you find marginal average cost?

There is marginal cost and there is average cost but a marginal average cost makes no sense.

When a firm's marginal revenues are higher than its marginal cost?

Marginal cost is

If you have total cost and total benefit how do you get marginal cost and marginal benefit?

Marginal cost is total cost/quantity Marginal benefit is total benefit/quantity

How do you figure out the marginal cost of capital?

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.

Relationship between marginal cost and variable cost?

Variable cost refers to the TOTAL variable cost of all units, whereas marginal cost is the variable cost of the last unit only. Variable cost is the sum of all the individual marginal costs. The derivative of the Variable Cost is the Marginal Cost. The integral of the Marginal cost is the Variable Cost.

What is the differences between standard cost and marginal cost?

The main difference between standard cost and marginal cost is that in standard cost a target is set and in marginal cost there is no target set. Marginal cost is the change of the total cost due to the quantity produced.

What is the optimal level of pollution?

when marginal benefit is equal to marginal cost To be more specific: When the marginal damage cost of polluting is equal to the marginal abatement cost of polluting (or the marginal benefit of polluting, which is equivalent to the MAC)

Marginal cost when buying a house?

marginal cost influences the buyer of the house. If the marginal benefit surpasses or even equal with the marginal cost, the buyer normally decides to buy the house.

What is meant by marginal cost?

marginal cost is extra cost to produce one extra unit

How will get total cost function form marginal cost function?

Find the integral of the marginal cost.

What is the equation for marginal net benefits?

Marginal net benefits= Marginal benefit- Marginal cost

What Relation between marginal cost and average cost?

relation ship between average cost and marginal cost

What is the formula to find the marginal cost?

Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.

A monopolist will set its production at a level where marginal cost is equal to?

A monopolist will set production at a level where marginal cost is equal to marginal revenue.

Relation between marginal efficiency of capital and marginal efficiency of investment?

MEC is the highest rate of return expected from an additional unit of capital stock over its cost. MEI is the expected rate of return from one additional unit of investmeni.

Conceptual difference between marginal cost of capital and weighted average cost of capital?

WACC is the total average cost of capital to company which is calculated by taking into account the weights of all type of capital existed at a particular date in the capital structure of the company (Equity, Debt, bonds, debentures etc). while the MCC is the incremental cost of capital which comes into existence when fresh capital is raised. It will depend on the type of capital raised, its weight and its cost.