What is the cost of capital?

There is a cost for capital and there is a return on capital.
The cost of debt capital is the interest rate applied to the debt. Simple.
The cost of equity capital is a bit more subtle and is the rate required by the equity owner to,compensate for the risk inherent in the business.
Cost of capital, for both debt and equity, depends on risk. Higher risk, higher cost of capiatal.

As cost of capital decreases, valuation increases, all things being equal. As the cost of capital increases, valuation decreases.

So my question is, what happens to the cost of capital when your emails are read and can be acted on by the government? What about when the government deems your objectives too disruptive and seeks to undermine or destroy you? What does that do to the cost of capital? I suspect that it increases the cost, which decreases valuation, all things being equal.

Just sayin’.



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