Introduction The cost of capital is used to discount after tax cash flows expected from a firm's investment decision This. in turn determines whether the investment should be accepted or rejected according to the value it Is expected to create Cost of capital is thought of as the rate of return required by the market suppliers of capital in order to attract their funds to the firmIntroduction • The cost of capital is used to discount after￾tax cash flows expected from a firm’s investment decision. This, in turn, determines whether the investment should be accepted or rejected according to the value it is expected to create. • Cost of capital is thought of as the rate of return required by the market suppliers of capital in order to attract their funds to the firm