Occasionally referred to as cost of money, this term refers to the expense incurred in obtaining funds used as capital assets is referred to as the cost of capital. In this context, capital can be either operating capital, cash as a capital asset, or fixed asset capital.

Cost of capital is not the same as capital cost. Loosely speaking, capital cost is the cost of constructing or acquiring assets. Cost of capital is the cost of obtaining the money needed to construct or acquire the assets.

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