[Verse 1]
Every company needs money to grow and thrive
Equipment, buildings, workers to keep dreams alive
But where does funding come from, what's the price they pay?
Interest rates and dividends eating profits away
The cost of capital measures what it takes to borrow
Weighted average tells us the expense of tomorrow
[Chorus]
Cost of capital, what's the rate?
Debt and equity, calculate
WACC is the magic number we seek
Cost of capital makes companies speak
Every dollar borrowed has a fee
Every share issued isn't free
Cost of capital, know the price
Before you roll the business dice
[Verse 2]
Debt is cheaper 'cause interest gets deducted
From taxable income, the burden's reduced
But equity holders want returns on their stake
Dividends and growth for the risks that they take
Banks want their interest, shareholders demand more
The blended cost tells us what financing will score
[Chorus]
Cost of capital, what's the rate?
Debt and equity, calculate
WACC is the magic number we seek
Cost of capital makes companies speak
Every dollar borrowed has a fee
Every share issued isn't free
Cost of capital, know the price
Before you roll the business dice
[Bridge]
When investments beckon and projects appear
The hurdle rate whispers in management's ear
If returns exceed the cost of funds
Then green lights flash and the deal gets done
But if the project can't clear the bar
That capital's better invested elsewhere by far
[Verse 3]
Market conditions shift the numbers around
When interest climbs, cheaper funding's hard to found
Risk assessment changes what investors will take
Higher uncertainty means higher rates at stake
The cost of capital guides every major choice
In corporate boardrooms, it's the deciding voice
[Chorus]
Cost of capital, what's the rate?
Debt and equity, calculate
WACC is the magic number we seek
Cost of capital makes companies speak
Every dollar borrowed has a fee
Every share issued isn't free
Cost of capital, know the price
Before you roll the business dice
[Outro]
From startups to giants, the principle's the same
Understanding funding costs is the corporate game
Cost of capital - the foundation stone
For building wealth that companies own