Ch. 12-Cost of capital For nvestors the rate of return on a security is a benefit of investing. For Financial Managers, that same rate of return is a cost of raising funds that are needed to operate the firm In other words, the cost of raising funds is the firms cost of capitalCh. 12 - Cost of Capital • For Investors, the rate of return on a security is a benefit of investing. • For Financial Managers, that same rate of return is a cost of raising funds that are needed to operate the firm. • In other words, the cost of raising funds is the firm’s cost of capital