Marginal Cost of Capital

Definition: Marginal Cost of Capital is the cost associated with raising one extra dollar at a particular moment via any form of capital.
Capital is any money used to finance a business and/or its operations. There are many different sources (types) of capital: traditional debt or equity financing or owner financing, grants, gains on investment capital, retained earnings, accrual financing contracts and forward payment agreements on capital.
There is a cost associated with obtaining capital. The cost is NOT the same for each type and changes over time.

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