Capital Cost
Capital Cost (Definition)
Capital cost refers to the total cost needed to bring a project to a commercially operable status.
Key aspects of capital costs include:
- Includes all expenses incurred to acquire long-term assets
- Often involves significant upfront investments
- Can include costs for land, buildings, equipment, and infrastructure
- May also cover costs of installation and initial setup
- Typically depreciated over the assets useful life
- Important factor in investment decisions and project evaluations
- Can impact a companys financial statements and tax obligations
Understanding and managing capital costs is crucial for effective financial planning and investment decision-making.