What do you understand by cost of capital? Explain the process to compute cost of capital for debt and equity.

Cost of capital is an essential financial concept that represents the minimum rate of return that a company needs to earn on its investments to maintain or increase its share value. It is the weighted average cost of funds that a company acquires from various sources, such as debt, equity, and retained earnings, to finance its operations. Cost of capital is an important financial tool for evaluating investment decisions, determining the appropriate capital structure, and measuring the overall financial performance of the company.

The cost of capital can be computed by using various methods, including the cost of debt and cost of equity methods. The cost of debt is the interest rate that a company pays _______ ____ __________ _______ _____ ___ __________ _____ _____ _________ ____ _______.
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