Cost of Capital
解释资本成本作为投资者要求的最低回报率，用于折现现金流计算净现值，决定项目是否应被接受。
When appraising investments we need to know the investor's required rate of return (see Chapter 3). This is the discounting rate applied to cash flows to ascertain their net present value (NPV). If NPV is positive a project is deemed to be acceptable because it will add to the value of the business; if negative, it would normally be rejected. Alternatively a project should not proceed unless its discounted cashftow (DCF) yield rate is higher than the required rate of return. This 'cut‐off' point, below which proposed investments should be rejected, is the minimum acceptable to investors. It is their cost of capital.