{"id":999963997,"date":"2023-07-05T14:40:07","date_gmt":"2023-07-05T07:40:07","guid":{"rendered":"https:\/\/bizzi.vn\/?p=999963997"},"modified":"2026-06-09T13:48:56","modified_gmt":"2026-06-09T06:48:56","slug":"what-is-the-cost-of-capital","status":"publish","type":"post","link":"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/","title":{"rendered":"What is the cost of capital? Why do businesses need to understand it to optimize their finances?"},"content":{"rendered":"<p class=\"ng-star-inserted\"><em><span class=\"ng-star-inserted\">In the modern business context, making\u00a0<\/span><span class=\"ng-star-inserted\">financial decision<\/span><span class=\"ng-star-inserted\">\u00a0Wisdom is the key to everyone&#039;s success.\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">. One of the most fundamental and important concepts in\u00a0<\/span><span class=\"ng-star-inserted\">corporate finance<\/span><span class=\"ng-star-inserted\">\u00a0What managers need to master is\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">What is the cost of capital?<\/span><\/strong><span class=\"ng-star-inserted\">. Understanding this term not only helps\u00a0<\/span><span class=\"ng-star-inserted\">investment project evaluation<\/span><span class=\"ng-star-inserted\">\u00a0but also the basis for optimization.\u00a0<\/span><span class=\"ng-star-inserted\">capital structure<\/span><span class=\"ng-star-inserted\">\u00a0and improve operational efficiency.<\/span><\/em><\/p>\n<p class=\"ng-star-inserted\"><em><span class=\"ng-star-inserted\"><strong><a href=\"https:\/\/bizzi.vn\/\">Bizzi <\/a><\/strong>With a comprehensive cost management solution set following international standard professional processes, we understand that effectively managing all types of costs - including costs related to <\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0\u2013 is the key factor to save time and resources for\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">. Let&#039;s dig deeper into\u00a0<\/span><span class=\"ng-star-inserted\">cost of capital<\/span><span class=\"ng-star-inserted\">.<\/span><\/em><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Index<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewbox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewbox=\"0 0 24 24\" version=\"1.2\" baseprofile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Chi_phi_su_dung_von_la_gi\" >What is the cost of capital?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Tai_sao_chi_phi_su_dung_von_lai_quan_trong_trong_quan_ly_tai_chinh\" >Why is cost of capital important in financial management?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Dac_diem_cua_chi_phi_su_dung_von\" >Characteristics of cost of capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Nhung_yeu_to_quyet_dinh_chi_phi_su_dung_von\" >What factors determine the cost of capital?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Cac_loai_chi_phi_su_dung_von\" >Types of cost of capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Cac_dac_diem_khac\" >Other features<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Y_nghia_cua_chi_phi_su_dung_von\" >Meaning of cost of capital<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Bizzi_tu_dong_hoa_va_tinh_gon_cac_quy_trinh_chien_luoc_dua_tren_chi_phi_su_dung_von\" >Bizzi automates and streamlines strategic processes based on cost of capital\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/bizzi.vn\/en\/what-is-the-cost-of-capital\/#Ket_luan\" >Conclude<\/a><\/li><\/ul><\/nav><\/div>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Chi_phi_su_dung_von_la_gi\"><\/span>What is the cost of capital?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<blockquote>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">In essence,\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0(also known as\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">) can be understood as\u00a0<\/span><span class=\"ng-star-inserted\">opportunity cost<\/span><span class=\"ng-star-inserted\">\u00a0of use\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0to\u00a0<\/span><span class=\"ng-star-inserted\">invest<\/span><span class=\"ng-star-inserted\">\u00a0into one\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0or\u00a0<\/span><span class=\"ng-star-inserted\">project<\/span><span class=\"ng-star-inserted\">. It represents\u00a0<\/span><span class=\"ng-star-inserted\">required rate of return<\/span><span class=\"ng-star-inserted\">\u00a0(required rate of return) that suppliers\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0\u2013 including both creditors (lenders) and owners\u00a0<\/span><span class=\"ng-star-inserted\">own<\/span><span class=\"ng-star-inserted\">\u00a0(shareholder) \u2013 expected to receive when providing\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0give\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">, based on the level\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0that they bear.<\/span><\/p>\n<\/blockquote>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">This concept can be viewed from two perspectives:<\/span><\/p>\n<ul>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">For Enterprises (capital users):<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0This is the amount\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0(although not always in cash)\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0must accept to obtain and maintain the right to use the resource\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0there.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">For Investors (capital providers):<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0This is\u00a0<\/span><span class=\"ng-star-inserted\">Required Return<\/span><span class=\"ng-star-inserted\">\u00a0or\u00a0<\/span><span class=\"ng-star-inserted\">discount rate<\/span><span class=\"ng-star-inserted\">\u00a0that they use to\u00a0<\/span><span class=\"ng-star-inserted\">Evaluate<\/span><span class=\"ng-star-inserted\">\u00a0see account\u00a0<\/span><span class=\"ng-star-inserted\">invest<\/span><span class=\"ng-star-inserted\">\u00a0enter\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0is worthy of\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0to give up or not to give up<\/span><\/li>\n<\/ul>\n<p style=\"text-align: justify;\">To put it more simply, the cost of capital is the \u201cprice of using money\u201d. Economists say that the essence is the opportunity cost of using that capital to invest in businesses.<\/p>\n<p style=\"text-align: justify;\">To meet capital needs, businesses or business people must mobilize from many sources. These sources are classified into two main categories, namely debt capital and equity capital. Each different type will have a different cost of capital.<\/p>\n<figure id=\"attachment_999973360\" aria-describedby=\"caption-attachment-999973360\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-999973360\" title=\"What is the cost of capital? It is the \u201cprice of using money\u201d\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/Xem-xet-chi-phi-su-dung-von-giup-cho-nha-quan-tri-co-duoc-tam-nhin-khi-can-nhac-lua-chon-chien-luoc-huy-dong-von-dai-han-1024x576-1.jpg\" alt=\"What is the cost of capital? It is the \u201cprice of using money\u201d\" width=\"1200\" height=\"675\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/Xem-xet-chi-phi-su-dung-von-giup-cho-nha-quan-tri-co-duoc-tam-nhin-khi-can-nhac-lua-chon-chien-luoc-huy-dong-von-dai-han-1024x576-1.jpg 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/Xem-xet-chi-phi-su-dung-von-giup-cho-nha-quan-tri-co-duoc-tam-nhin-khi-can-nhac-lua-chon-chien-luoc-huy-dong-von-dai-han-1024x576-1-300x169.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/Xem-xet-chi-phi-su-dung-von-giup-cho-nha-quan-tri-co-duoc-tam-nhin-khi-can-nhac-lua-chon-chien-luoc-huy-dong-von-dai-han-1024x576-1-768x432.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/Xem-xet-chi-phi-su-dung-von-giup-cho-nha-quan-tri-co-duoc-tam-nhin-khi-can-nhac-lua-chon-chien-luoc-huy-dong-von-dai-han-1024x576-1-18x10.jpg 18w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-999973360\" class=\"wp-caption-text\">What is the cost of capital? It is the \u201cprice of using money\u201d<\/figcaption><\/figure>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Tai_sao_chi_phi_su_dung_von_lai_quan_trong_trong_quan_ly_tai_chinh\"><\/span>Why is cost of capital important in financial management?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Identify\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0is an indispensable step in\u00a0<\/span><span class=\"ng-star-inserted\">financial management<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0because it serves several key purposes:<\/span><\/p>\n<ul>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Investment Project Appraisal and Evaluation:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">The cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0commonly used as\u00a0<\/span><span class=\"ng-star-inserted\">discount rate<\/span><span class=\"ng-star-inserted\">\u00a0(or\u00a0<\/span><span class=\"ng-star-inserted\">profit barrier<\/span><span class=\"ng-star-inserted\">\u00a0\u2013 hurdle rate) to calculate the Net Present Value (NPV) of the\u00a0<\/span><span class=\"ng-star-inserted\">investment project<\/span><span class=\"ng-star-inserted\">. One\u00a0<\/span><span class=\"ng-star-inserted\">project<\/span><span class=\"ng-star-inserted\">\u00a0is considered financially viable when its expected rate of return exceeds\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">. It helps answer the question as in the example given: will the purchase of new machinery create\u00a0<\/span><span class=\"ng-star-inserted\">profit<\/span><span class=\"ng-star-inserted\">\u00a0enough to compensate\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0of number\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0to give up or not to give up<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Business Valuation:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">The cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0is a core element in the models.\u00a0<\/span><span class=\"ng-star-inserted\">business valuation<\/span><span class=\"ng-star-inserted\">\u00a0based on discounted cash flow (DCF), which helps determine\u00a0<\/span><span class=\"ng-star-inserted\">value<\/span><span class=\"ng-star-inserted\">\u00a0present of\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Financial Decision Making and Capital Structure:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0Understanding\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0help\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0show\u00a0<\/span><span class=\"ng-star-inserted\">decision<\/span><span class=\"ng-star-inserted\">\u00a0on how to mobilize\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0new (debt or\u00a0<\/span><span class=\"ng-star-inserted\">equity<\/span><span class=\"ng-star-inserted\">) and maintain\u00a0<\/span><span class=\"ng-star-inserted\">capital structure<\/span><span class=\"ng-star-inserted\">\u00a0optimized to minimize total\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0and maximize\u00a0<\/span><strong><a href=\"https:\/\/bizzi.vn\/gia-tri-doanh-nghiep-la-gi\/\"><span class=\"ng-star-inserted\">Enterprise value<\/span><\/a><\/strong><span class=\"ng-star-inserted\">.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Performance Evaluation:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0Compare the actual rate of return of\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0or\u00a0<\/span><span class=\"ng-star-inserted\">project<\/span><span class=\"ng-star-inserted\">\u00a0with\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0help\u00a0<\/span><span class=\"ng-star-inserted\">measure<\/span><span class=\"ng-star-inserted\">\u00a0and\u00a0<\/span><span class=\"ng-star-inserted\">Evaluate<\/span><span class=\"ng-star-inserted\">\u00a0efficiency of use\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Dac_diem_cua_chi_phi_su_dung_von\"><\/span>Characteristic <strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">of cost of capital<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To understand the cost of capital in depth, it is necessary to grasp the following fundamental properties:<\/p>\n<ul>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Capital type:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">The cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0depends on\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">type of capital<\/span><\/span><span class=\"ng-star-inserted\">\u00a0but\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">enterprise<\/span><\/span><span class=\"ng-star-inserted\">\u00a0use. There are two\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Main ingredients<\/span><\/span><span class=\"ng-star-inserted\">:\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of debt<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0(cost of debt) and\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of equity<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0(cost of equity). Each type has its own characteristics and ways of determining it.\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">expense<\/span><\/span><span class=\"ng-star-inserted\">\u00a0different.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Risk:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0This is the most influential attribute. The level\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">risk<\/span><\/span><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">enterprise<\/span><\/span><span class=\"ng-star-inserted\">\u00a0or\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">project<\/span><\/span><span class=\"ng-star-inserted\">\u00a0proportional to\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Required Return<\/span><\/span><span class=\"ng-star-inserted\">\u00a0of the house\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">invest<\/span><\/span><span class=\"ng-star-inserted\">.\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Risk<\/span><\/span><span class=\"ng-star-inserted\">\u00a0higher leads to\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0higher and vice versa.\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Risk<\/span><\/span><span class=\"ng-star-inserted\">\u00a0Okay\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">reflect<\/span><\/span><span class=\"ng-star-inserted\">\u00a0enter\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">required rate of return<\/span><\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Required Return:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">The cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0is\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">required rate of return<\/span><\/span><span class=\"ng-star-inserted\">\u00a0good\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">expected return<\/span><\/span><span class=\"ng-star-inserted\">\u00a0of suppliers\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">capital<\/span><\/span><span class=\"ng-star-inserted\">. This is the minimum profit level that\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">project<\/span><\/span><span class=\"ng-star-inserted\">\u00a0or\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">enterprise<\/span><\/span><span class=\"ng-star-inserted\">\u00a0need to be achieved to satisfy the stakeholders\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">capital<\/span><\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Capital structure:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0Proportion between\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">debt capital<\/span><\/span><span class=\"ng-star-inserted\">\u00a0and\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">equity<\/span><\/span><span class=\"ng-star-inserted\">\u00a0in total resources\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">capital<\/span><\/span><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">enterprise<\/span><\/span><span class=\"ng-star-inserted\">\u00a0(<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">capital structure<\/span><\/span><span class=\"ng-star-inserted\">) directly affects\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">weighted average<\/span><\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Issuance costs:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0When mobilizing\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">capital<\/span><\/span><span class=\"ng-star-inserted\">\u00a0new (both debt and equity)\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">equity<\/span><\/span><span class=\"ng-star-inserted\">),\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">enterprise<\/span><\/span><span class=\"ng-star-inserted\">\u00a0must bear the\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">expense<\/span><\/span><span class=\"ng-star-inserted\">\u00a0related fees such as consulting fees, underwriting, advertising, etc.\u00a0<\/span><span class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">issuance costs<\/span><\/span><span class=\"ng-star-inserted\">\u00a0This also needs to be taken into account when determining\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0reality.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Nhung_yeu_to_quyet_dinh_chi_phi_su_dung_von\"><\/span>What factors determine the cost of capital?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">The cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0not fixed\u00a0<\/span><span class=\"ng-star-inserted\">fluctuation<\/span><span class=\"ng-star-inserted\">\u00a0based on the impact of many factors:<\/span><\/p>\n<p class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Objective factors (Market)<\/span><\/strong><\/p>\n<ul>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Market interest rate:<\/span><span class=\"ng-star-inserted\">\u00a0Level\u00a0<\/span><span class=\"ng-star-inserted\">interest rate<\/span><span class=\"ng-star-inserted\">\u00a0common on\u00a0<\/span><span class=\"ng-star-inserted\">financial market<\/span><span class=\"ng-star-inserted\">\u00a0direct impact on\u00a0<\/span><span class=\"ng-star-inserted\">cost of debt<\/span><span class=\"ng-star-inserted\">\u00a0and indirectly to\u00a0<\/span><span class=\"ng-star-inserted\">cost of equity<\/span><span class=\"ng-star-inserted\">.\u00a0<\/span><span class=\"ng-star-inserted\">Interest rate<\/span><span class=\"ng-star-inserted\">\u00a0high increase\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">.<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Corporate income tax policy:<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">Interest<\/span><span class=\"ng-star-inserted\">\u00a0To be\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0deductible when calculating\u00a0<\/span><span class=\"ng-star-inserted\">tax<\/span><span class=\"ng-star-inserted\">, create\u00a0<\/span><span class=\"ng-star-inserted\">tax shield<\/span><span class=\"ng-star-inserted\">\u00a0(tax shield) reduce\u00a0<\/span><span class=\"ng-star-inserted\">cost of debt<\/span><span class=\"ng-star-inserted\">\u00a0effective.\u00a0<\/span><span class=\"ng-star-inserted\">Tax rate<\/span><span class=\"ng-star-inserted\">\u00a0high then\u00a0<\/span><span class=\"ng-star-inserted\">tax shield<\/span><span class=\"ng-star-inserted\">\u00a0big, reduce\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0borrow more<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Macroeconomic situation:<\/span><span class=\"ng-star-inserted\">\u00a0Inflation, economic growth, political stability\u2026 all affect\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0and\u00a0<\/span><span class=\"ng-star-inserted\">Required Return<\/span><span class=\"ng-star-inserted\">\u00a0above\u00a0<\/span><span class=\"ng-star-inserted\">market<\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<\/ul>\n<p class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Subjective factors (Business)<\/span><\/strong><\/p>\n<ul>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Investment policy:<\/span><span class=\"ng-star-inserted\">\u00a0If\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">invest<\/span><span class=\"ng-star-inserted\">\u00a0into the\u00a0<\/span><span class=\"ng-star-inserted\">project<\/span><span class=\"ng-star-inserted\">\u00a0Have\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0higher than level\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0industry average,\u00a0<\/span><span class=\"ng-star-inserted\">Required Return<\/span><span class=\"ng-star-inserted\">\u00a0from home\u00a0<\/span><span class=\"ng-star-inserted\">invest<\/span><span class=\"ng-star-inserted\">\u00a0will increase, increase\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">.<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Financing Policy (Capital Structure):<\/span><span class=\"ng-star-inserted\">\u00a0Increasing the proportion\u00a0<\/span><span class=\"ng-star-inserted\">debt capital<\/span><span class=\"ng-star-inserted\">\u00a0compared to\u00a0<\/span><span class=\"ng-star-inserted\">equity<\/span><span class=\"ng-star-inserted\">\u00a0increase\u00a0<\/span><span class=\"ng-star-inserted\">financial risk<\/span><span class=\"ng-star-inserted\">, leading to\u00a0<\/span><span class=\"ng-star-inserted\">Required Return<\/span><span class=\"ng-star-inserted\">\u00a0for both creditors and owners\u00a0<\/span><span class=\"ng-star-inserted\">own<\/span><span class=\"ng-star-inserted\">\u00a0all increased (except for the benefit from\u00a0<\/span><span class=\"ng-star-inserted\">tax shield<\/span><span class=\"ng-star-inserted\">\u00a0at reasonable debt levels).<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Dividend policy:<\/span><span class=\"ng-star-inserted\">\u00a0Impact on retained earnings (<\/span><span class=\"ng-star-inserted\">internal equity<\/span><span class=\"ng-star-inserted\">). However, it should be noted that\u00a0<\/span><span class=\"ng-star-inserted\">cost of capital<\/span><span class=\"ng-star-inserted\">\u00a0from retained earnings is not zero but is\u00a0<\/span><span class=\"ng-star-inserted\">opportunity cost<\/span><span class=\"ng-star-inserted\">, equivalent\u00a0<\/span><span class=\"ng-star-inserted\"><strong><a href=\"https:\/\/bizzi.vn\/chi-phi-von-la-gi\/\">cost of capital<\/a><\/strong> owner<\/span><span class=\"ng-star-inserted\">\u00a0New release.<\/span><\/li>\n<\/ul>\n<figure id=\"attachment_999973359\" aria-describedby=\"caption-attachment-999973359\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-999973359\" title=\"The cost of capital is not fixed but fluctuates based on the impact of many factors.\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/chi-phi-su-dung-von-la-gi.jpg\" alt=\"The cost of capital is not fixed but fluctuates based on the impact of many factors.\" width=\"1200\" height=\"723\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/chi-phi-su-dung-von-la-gi.jpg 800w, https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/chi-phi-su-dung-von-la-gi-300x181.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/chi-phi-su-dung-von-la-gi-768x463.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/07\/chi-phi-su-dung-von-la-gi-18x12.jpg 18w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-999973359\" class=\"wp-caption-text\">The cost of capital is not fixed but fluctuates based on the impact of many factors.<\/figcaption><\/figure>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Cac_loai_chi_phi_su_dung_von\"><\/span>Types of cost of capital<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">As mentioned,\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0is composed of two\u00a0<\/span><span class=\"ng-star-inserted\">Main ingredients<\/span><span class=\"ng-star-inserted\">:<\/span><\/p>\n<ul>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Cost of Debt (Rd):<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0To be\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0but\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0pay for use\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0borrow (from)\u00a0<\/span><span class=\"ng-star-inserted\">bank<\/span><span class=\"ng-star-inserted\">, bond issuance\u2026). This is usually\u00a0<\/span><span class=\"ng-star-inserted\">interest rate<\/span><span class=\"ng-star-inserted\">\u00a0loan or yield to maturity of the bond, after adjustment by\u00a0<\/span><span class=\"ng-star-inserted\">tax shield<\/span><span class=\"ng-star-inserted\">.\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Cost of debt<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0after\u00a0<\/span><span class=\"ng-star-inserted\">tax<\/span><span class=\"ng-star-inserted\">\u00a0=\u00a0<\/span><span class=\"ng-star-inserted\">Rd<\/span><span class=\"ng-star-inserted\">\u00a0* (1 \u2013\u00a0<\/span><span class=\"ng-star-inserted\">Tc<\/span><span class=\"ng-star-inserted\">).<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Cost of Equity (Re):<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0To be\u00a0<\/span><span class=\"ng-star-inserted\">Required Return<\/span><span class=\"ng-star-inserted\">\u00a0of common shareholders\u00a0<\/span><span class=\"ng-star-inserted\">invest<\/span><span class=\"ng-star-inserted\">\u00a0enter\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">. Determination\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of equity<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0more difficult because there is no explicit commitment like interest. It is usually estimated by\u00a0<\/span><span class=\"ng-star-inserted\">model<\/span><span class=\"ng-star-inserted\">\u00a0like\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Capital Asset Pricing Model (CAPM)<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0or\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Dividend Growth Model<\/span><\/strong><span class=\"ng-star-inserted\">.\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">CAPM<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0Calculate Re based on\u00a0<\/span><span class=\"ng-star-inserted\">interest rate<\/span><span class=\"ng-star-inserted\">\u00a0fly\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">,\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0system (beta) and compensation\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">market<\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<\/ul>\n<p class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Weighted Average Cost of Capital (WACC)<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0is the most commonly used index to\u00a0<\/span><span class=\"ng-star-inserted\">measure<\/span><span class=\"ng-star-inserted\">\u00a0total\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">, reflects\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">average<\/span><span class=\"ng-star-inserted\">\u00a0of each coin\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0mobilize from all sources according to\u00a0<\/span><span class=\"ng-star-inserted\">capital structure<\/span><span class=\"ng-star-inserted\">\u00a0present or target.<\/span><\/p>\n<p class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Formula for calculating WACC:<\/span><\/strong><\/p>\n<p class=\"ng-star-inserted\" style=\"text-align: center;\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">WACC = (E\/V) * Re + (D\/V) * Rd * (1 \u2013 Tc)<\/span><\/strong><\/p>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">In there:<\/span><\/p>\n<ul>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Re:\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Cost of equity<\/span><\/strong><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Rd:\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Cost of debt<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0before\u00a0<\/span><span class=\"ng-star-inserted\">tax<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">E: Total\u00a0<\/span><span class=\"ng-star-inserted\">value<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">market<\/span><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">owner<\/span><span class=\"ng-star-inserted\">\u00a0(<\/span><span class=\"ng-star-inserted\">Market capitalization<\/span><span class=\"ng-star-inserted\">)<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">D: Total\u00a0<\/span><span class=\"ng-star-inserted\">value<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">market<\/span><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\">debt capital<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">V: Total\u00a0<\/span><span class=\"ng-star-inserted\">value<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">market<\/span><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0(V = E + D)<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">(E\/V) and (D\/V): Proportion of\u00a0<\/span><span class=\"ng-star-inserted\">equity<\/span><span class=\"ng-star-inserted\">\u00a0and\u00a0<\/span><span class=\"ng-star-inserted\">debt capital<\/span><span class=\"ng-star-inserted\">\u00a0in total\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><\/li>\n<li class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Tc:\u00a0<\/span><span class=\"ng-star-inserted\">Tax rate<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">business income<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Cac_dac_diem_khac\"><\/span>Other features<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">In addition to the basic properties and calculations, there are some advanced aspects to note:<\/span><\/p>\n<ul>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Marginal Cost of Capital:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0To be\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0of copper\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0finally mobilize more. It is important when\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0need to mobilize a quantity\u00a0<\/span><span class=\"ng-star-inserted\">capital<\/span><span class=\"ng-star-inserted\">\u00a0big for the\u00a0<\/span><span class=\"ng-star-inserted\">project<\/span><span class=\"ng-star-inserted\">\u00a0new, helps identify\u00a0<\/span><span class=\"ng-star-inserted\">capital scale<\/span><span class=\"ng-star-inserted\">\u00a0appropriate mobilization before\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0started to increase significantly.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Tax Shield Effect:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0As said,\u00a0<\/span><span class=\"ng-star-inserted\">interest<\/span><span class=\"ng-star-inserted\">\u00a0reduce\u00a0<\/span><span class=\"ng-star-inserted\">taxable income<\/span><span class=\"ng-star-inserted\">, creating benefits for\u00a0<\/span><span class=\"ng-star-inserted\">tax<\/span><span class=\"ng-star-inserted\">. Calculation\u00a0<\/span><span class=\"ng-star-inserted\">cost of debt<\/span><span class=\"ng-star-inserted\">\u00a0after\u00a0<\/span><span class=\"ng-star-inserted\">tax<\/span><span class=\"ng-star-inserted\">\u00a0has included this effect, making\u00a0<\/span><span class=\"ng-star-inserted\">debt capital<\/span><span class=\"ng-star-inserted\">\u00a0seems cheaper\u00a0<\/span><span class=\"ng-star-inserted\">equity<\/span><span class=\"ng-star-inserted\">\u00a0in terms of\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0clear.<\/span><\/li>\n<li class=\"ng-star-inserted\"><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Project Cost of Capital vs. Corporate Cost of Capital:<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0When\u00a0<\/span><span class=\"ng-star-inserted\">Evaluate<\/span><span class=\"ng-star-inserted\">\u00a0one\u00a0<\/span><span class=\"ng-star-inserted\">project<\/span><span class=\"ng-star-inserted\">\u00a0Have\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0significantly different from\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">average<\/span><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">, should use\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0exclusively for\u00a0<\/span><span class=\"ng-star-inserted\">project<\/span><span class=\"ng-star-inserted\">\u00a0that instead of the WACC of the whole\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Y_nghia_cua_chi_phi_su_dung_von\"><\/span>Meaning of cost of capital<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul style=\"text-align: justify;\">\n<li><strong>Evaluate financial decisions:<\/strong> provides important information for companies and investors to make decisions about financial resource allocation. This helps determine how to finance or invest in a company&#039;s projects and capital structure.<\/li>\n<li><strong>Evaluate investment opportunities:<\/strong> assist companies and investors in assessing various investment opportunities. By converting future cash flows into present value through discounting, the cost of capital helps make decisions about investing in the most profitable projects.<\/li>\n<li><strong>Budget management:<\/strong> Play a role in setting the company&#039;s budget. It helps management use the company&#039;s financial resources to achieve business goals and minimize capital costs.<\/li>\n<li><strong>Measure progress:<\/strong> Combining project progress with capital use, the cost of capital can be used to measure the progress of a project or investment. It helps to determine whether the project is progressing as planned and delivering the expected financial benefits.<\/li>\n<li><strong>Optimizing capital and debt:<\/strong> provides useful information for companies that need to expand their business operations. It helps optimize the use of capital and maintain the lowest debt level to meet shareholders&#039; wishes.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Bizzi_tu_dong_hoa_va_tinh_gon_cac_quy_trinh_chien_luoc_dua_tren_chi_phi_su_dung_von\"><\/span>Bizzi <span class=\"ng-star-inserted\">Automate and streamline strategic processes based on cost of capital\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">However, to be able to give these\u00a0<\/span><span class=\"ng-star-inserted\">financial decision<\/span><span class=\"ng-star-inserted\">\u00a0strategy based on\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0and other complex indicators,\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0need to have a foundation\u00a0<\/span><span class=\"ng-star-inserted\">financial management<\/span><span class=\"ng-star-inserted\">\u00a0strong, especially the ability to control and <strong><a href=\"https:\/\/bizzi.vn\/quan-ly-chi-phi\/\">Effective management of all types of costs <\/a><\/strong><\/span><span class=\"ng-star-inserted\">\u00a0daily activities. This is where\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Bizzi<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0bring\u00a0<\/span><span class=\"ng-star-inserted\">value<\/span><span class=\"ng-star-inserted\">.<\/span><\/p>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">With a comprehensive set of solutions to help\u00a0<\/span><span class=\"ng-star-inserted\">cost management business<\/span><span class=\"ng-star-inserted\">\u00a0effective and time-saving according to international standard professional process,\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Bizzi<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0Automate and streamline resource-intensive processes such as <strong><a href=\"https:\/\/bizzi.vn\/xu-ly-hoa-don\/\">Invoice processing<\/a><\/strong>, manage payment requests, and report expenses. Freeing up time and manpower from these manual tasks not only helps\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0save\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0directly but also provide data\u00a0<\/span><span class=\"ng-star-inserted\">finance<\/span><span class=\"ng-star-inserted\">\u00a0more clear, more precise <\/span><\/p>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Bizzi&#039;s trusted data platform is a prerequisite for developers <\/span><span class=\"ng-star-inserted\">manage<\/span><span class=\"ng-star-inserted\">\u00a0can analyze deeply about\u00a0<\/span><span class=\"ng-star-inserted\">cost of capital<\/span><span class=\"ng-star-inserted\">,\u00a0<\/span><span class=\"ng-star-inserted\">project evaluation<\/span><span class=\"ng-star-inserted\">\u00a0accurately, and give the\u00a0<\/span><span class=\"ng-star-inserted\">financial decision<\/span><span class=\"ng-star-inserted\">\u00a0strategic to optimize\u00a0<\/span><span class=\"ng-star-inserted\">capital structure<\/span><span class=\"ng-star-inserted\">\u00a0and enhance competitiveness on\u00a0<\/span><span class=\"ng-star-inserted\">market<\/span><span class=\"ng-star-inserted\">.<\/span><\/p>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">In short, while mastering the theory of\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0is necessary for\u00a0<\/span><span class=\"ng-star-inserted\">financial management<\/span><span class=\"ng-star-inserted\">\u00a0At the high level, the application of technological solutions such as\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Bizzi<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0to\u00a0<\/span><span class=\"ng-star-inserted\">manage<\/span><span class=\"ng-star-inserted\">\u00a0the effectiveness of\u00a0<\/span><span class=\"ng-star-inserted\">expense<\/span><span class=\"ng-star-inserted\">\u00a0The foundation is the lever that helps\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0achieve\u00a0<\/span><span class=\"ng-star-inserted\">capital efficiency<\/span><span class=\"ng-star-inserted\">\u00a0maximize and realize sustainable growth goals. Discover now how\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Bizzi<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0can help\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">\u00a0your\u00a0<\/span><span class=\"ng-star-inserted\">cost management<\/span><span class=\"ng-star-inserted\">\u00a0Smarter today!<\/span><\/p>\n<p style=\"text-align: justify;\"><strong>Follow Bizzi to quickly receive the latest information:<\/strong><\/p>\n<ul>\n<li style=\"text-align: justify;\">Facebook:\u00a0<a href=\"https:\/\/www.facebook.com\/bizzivietnam\/\" target=\"_blank\" rel=\"noopener nofollow\">https:\/\/www.facebook.com\/bizzivietnam<\/a><\/li>\n<li style=\"text-align: justify;\">Linkedin:<a href=\"https:\/\/www.linkedin.com\/company\/bizzi-vietnam\/\" target=\"_blank\" rel=\"noopener nofollow\">\u00a0https:\/\/www.linkedin.com\/company\/bizzi-vietnam<\/a><\/li>\n<li style=\"text-align: justify;\">Youtube:\u00a0<a href=\"https:\/\/www.youtube.com\/@bizzivietnam\" target=\"_blank\" rel=\"noopener nofollow\">https:\/\/www.youtube.com\/@bizzivietnam<\/a><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Ket_luan\"><\/span>Conclude<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">Clearly understand\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">What is the cost of capital?<\/span><\/strong><span class=\"ng-star-inserted\">, how to identify and the influencing factors are a solid foundation for any\u00a0<\/span><span class=\"ng-star-inserted\">financial decision<\/span><span class=\"ng-star-inserted\">\u00a0important, from\u00a0<\/span><span class=\"ng-star-inserted\">investment project appraisal<\/span><span class=\"ng-star-inserted\">\u00a0arrive\u00a0<\/span><span class=\"ng-star-inserted\">business valuation<\/span><span class=\"ng-star-inserted\">\u00a0and optimization\u00a0<\/span><span class=\"ng-star-inserted\">capital structure<\/span><span class=\"ng-star-inserted\">. It is not just a number but\u00a0<\/span><span class=\"ng-star-inserted\">key indicators<\/span><span class=\"ng-star-inserted\">\u00a0<\/span><span class=\"ng-star-inserted\">reflect<\/span><span class=\"ng-star-inserted\">\u00a0level\u00a0<\/span><span class=\"ng-star-inserted\">risk<\/span><span class=\"ng-star-inserted\">\u00a0and\u00a0<\/span><span class=\"ng-star-inserted\">Required Return<\/span><span class=\"ng-star-inserted\">\u00a0belong to\u00a0<\/span><span class=\"ng-star-inserted\">market<\/span><span class=\"ng-star-inserted\">\u00a0for\u00a0<\/span><span class=\"ng-star-inserted\">enterprise<\/span><span class=\"ng-star-inserted\">. Job\u00a0<\/span><span class=\"ng-star-inserted\">manage<\/span><span class=\"ng-star-inserted\">\u00a0and optimization\u00a0<\/span><strong class=\"ng-star-inserted\"><span class=\"ng-star-inserted\">cost of capital<\/span><\/strong><span class=\"ng-star-inserted\">\u00a0directly contribute to the increase\u00a0<\/span><span class=\"ng-star-inserted\">Enterprise value<\/span><span class=\"ng-star-inserted\">\u00a0and\u00a0<\/span><span class=\"ng-star-inserted\">capital efficiency<\/span><span class=\"ng-star-inserted\">.<\/span><\/p>\n<figure id=\"attachment_999973254\" aria-describedby=\"caption-attachment-999973254\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-999973254\" title=\"Bizzi automates and streamlines resource-intensive processes like invoice processing\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/05\/05-gia-phap-cua-bizzi.jpg\" alt=\"Bizzi automates and streamlines resource-intensive processes like invoice processing\" width=\"1200\" height=\"675\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/05\/05-gia-phap-cua-bizzi.jpg 1920w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/05\/05-gia-phap-cua-bizzi-300x169.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/05\/05-gia-phap-cua-bizzi-1024x576.jpg 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/05\/05-gia-phap-cua-bizzi-768x432.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/05\/05-gia-phap-cua-bizzi-1536x864.jpg 1536w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/05\/05-gia-phap-cua-bizzi-18x10.jpg 18w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-999973254\" class=\"wp-caption-text\">Bizzi automates and streamlines resource-intensive processes like invoice processing<\/figcaption><\/figure>\n<p style=\"text-align: justify;\"><strong>&gt;&gt; See more: <a href=\"https:\/\/bizzi.vn\/so-tay-ke-toan-giai-thich-thuat-ngu-bootstrapping\/\">What is Bootstrapping?\u00a0<\/a><\/strong><\/p>\n<p style=\"text-align: justify;\"><strong>&gt;&gt; See more: <a href=\"https:\/\/bizzi.vn\/so-tay-ke-toan-giai-thich-thuat-ngu-account-payable\/\">Explain the term \u201cAccount Payable\u201d<\/a><\/strong><\/p>","protected":false},"excerpt":{"rendered":"<p>In the modern business landscape, making smart financial decisions is key to the success of any business\u2026.<\/p>","protected":false},"author":37,"featured_media":999963998,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[263],"tags":[],"class_list":["post-999963997","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kien-thuc"],"acf":[],"_links":{"self":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999963997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/users\/37"}],"replies":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/comments?post=999963997"}],"version-history":[{"count":7,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999963997\/revisions"}],"predecessor-version":[{"id":999973358,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999963997\/revisions\/999973358"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media\/999963998"}],"wp:attachment":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media?parent=999963997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/categories?post=999963997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/tags?post=999963997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}