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  • Water Cost of Capital

  • The Cost of Capital is the overall percentage cost of the funds used to finance a utility’s assets. It is a composite of the cost of the individual sources of funds including common equity stock, debt, and preferred stock. The overall Cost of Capital depends on the cost of each source and the proportion that source represents of all capital used by the utility. The authorized weighted Cost of Capital or rate of return is the percentage cost applied to the utilities’ rate base to determine the revenues it should earn on rate base (investment).