Investments glossary

Incremental Cost of Capital

Incremental cost of capital is a capital budgeting term that refers to the average cost a company incurs to issue one additional unit of debt or equity. The incremental cost of capital varies according to how many additional units of debt or equity a company wishes to issue. Being able to accurately calculate cost of capital and the incremental effects of issuing more equity or debt can help businesses reduce their overall financing costs.

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