In Kaplan, it is stated that cost of capital, discount rate, required rate of return every term means same thing.
Conceptually, I am only to understand cost of capital ans rate of return are same.
For lender rate of return is interest he demands for giving money. For borrower, the same rate is cost of capital he borrowed.
How is discount rate is similar term to cost of capital or rate of return? I am unable to get it conceptually tutor.
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Concept for Discount rate
5y ago#1What Kaplan states is correct. If the lender requires a return of 10% then the company has to pay them 10%.
However this is not relevant for Paper MA. It is in Paper FM that this is examined in detail and is therefore explained in detail in our free Paper FM lectures.
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