The Conceptions of The Cost of Capital in The Context of Corporate Management

Abstract

Cost of capital is an interdisciplinary scientific category and it is a subject ofresearch in many fields. It may be perceived as a decision parameter in the area of capitalgaining and investing by companies, as a factor determining the value of investment projectsand the whole company. It affects such areas of corporate management as capital budgeting,processes of fusions and takeovers, restructuring decisions. The cost of capital is the mostimportant element in the process of corporate management, to the same extent as informationabout other costs it has influence on key board decisions concerning the selection oftechnology, the scale of economic activities, activity localization etc. In the face of thecomplexity of the problem examined, it was made a research problem. The objective of thepaper is to analyze different conceptions of the cost of capital from the point of view of theirsignificance in corporate management. The paper is a study of theoretical and cognitivecharacter. The research was based on a systematic review of literature that provided thegrounds for the synthesis of the views concerning the research problem.