Differentiate between Weighted cost of capital and marginal cost of capital.

CPA-Financial-Management-Section-3 Revision kit

Weighted cost of capital and marginal cost of capital
Marginal cost of capital is the additional cost of capital for the extra capital to be raised. This is based on the new capital to be raised and additional cost to be incurred.

Weighted cost of capital is the cost of capital based on the existing sources finance. Unlike marginal cost of capital weighted cost of capital is based on the existing sources of capital and the cost of each source.

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