Opportunity Cost of Capital - the expected rate of return on the best alternative to a
project (investment). It is the appropriate discount rate for the future cash ows.
Net Present Value = Present Value of Future Cash Flows I
Weighted Average Cost of Capital
1. Capital Structure:
The 'mix of a company's longterm nancing is referred to as its capital structure.
Capital structure decisions refer to the blend of equity and debt used by the rm.