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Hello! What’s the difference between money cost of capital and weighted average cost of capital?
The money (or nominal) cost of capital is the actual weighted average cost of capital and is used to discount the actual/nominal cash flows.
The real cost of capital is the WACC with inflation removed and is used to discount the real cash flows (i.e. with inflation removed).
I explain all of this in my free lectures. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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