A Study on the Effect of Cost of Capital on Profitability of a company

Abstract

The Cost of Capital plays a significant role in capital budgeting decisions and is also used as a financial standard. The Weighted Average Cost of Capital (WACC) caters to the need to have a single rate, which helps to analyze and compare the cost of different sources of funds. It is important for all companies to understand the relationship between the cost of capital and its profitability to take proper care of the cost of capital to ensure a favorable financial situation in the company. The use of a statistical method such as correlation in understanding the relationship is systematic and scientific, which will provide better insight for future decision making. This paper undertakes to study the relationship between the cost of capital and profitability of Ports And Special Economic Zone Limited.