Cost of capital formula AccountingTools
May 27, 20190183;32;Cost of Capital Example. It pays $4,625,000 in interest on its bonds, and there is an unamortized debt premium of $1,750,000 currently on the companys books. The preferred stock pays interest of $1,030,000. The risk free rate of return is 5%, the return on the Dow Jones Industrials is 12%, and Jolts beta is 1.5.