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What is marginal cost of capital all about?
Marginal cost of capital is estimated as the extreme amount of money that is being earned. It is taken into account when the amount of capital produced increase gradually with the increase in marginal cost. Thus, to create additionalcapital, companies keep following the capital structure which is popularly known as hurdle rate or the minimum acceptable rate of return.
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- It is imperative to calculate the marginal cost of capital as it acts as a benchmark in generating more money.
- If any company is capable to earn maximum returns than those returns are invested for other purposes.
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