Cost of Capital in English
The Cost of Capital (Vietnamese: Chi phí sử dụng vốn) is the minimum rate of return a company must earn on its investments to satisfy the expectations of its capital providers — both shareholders and lenders. It functions as a "hurdle rate": any project whose expected return falls below the cost of capital destroys value rather than creating it, even if it is nominally profitable.
How It's Calculated
The most widely used measure is the Weighted Average Cost of Capital (WACC), which blends:
- Cost of Equity (Re): the return shareholders require, often estimated via the Capital Asset Pricing Model (CAPM): Re = Rf + β × (Rm − Rf)
- After-tax Cost of Debt (Rd × (1 − T)): the effective interest rate paid on borrowed funds, adjusted for the tax shield on interest expense
Formula: WACC = (E/V × Re) + (D/V × Rd × (1 − T)), where E is market value of equity, D is market value of debt, and V = E + D.
Why It Matters for Vietnamese SMEs
For Vietnamese SMEs, WACC is typically higher than for large listed corporations. Bank loan rates for SMEs commonly run 8–15% per year (versus 5–7% for blue-chip borrowers), and the equity risk premium demanded by investors in privately held companies is elevated due to limited liquidity and higher perceived business risk. As a result, many SMEs face a WACC in the 12–18% range.
WACC serves as the discount rate in Net Present Value (NPV) analysis: if a project's Internal Rate of Return (IRR) exceeds WACC, the project is expected to create shareholder value; if IRR falls below WACC, the project should generally be rejected. Understanding cost of capital helps SME owners decide whether borrowing to expand production capacity, purchase equipment, or fund working capital is financially justified — and helps them negotiate loan terms that keep the effective cost of debt sustainable.
Example
A trading company with VND 5 billion in equity (required return 20%) and VND 5 billion in bank debt (interest rate 10%, tax rate 20%) has a WACC of: (0.5 × 20%) + (0.5 × 10% × 0.8) = 10% + 4% = 14%. Any new investment project must generate an IRR above 14% to be worthwhile.
Related Terms
| English | Viết tắt | Tiếng Việt |
|---|---|---|
| WACC | Weighted Average Cost of Capital | Chi phí vốn bình quân gia quyền |
| Cost of Equity | Re | Chi phí vốn chủ sở hữu |
| Cost of Debt | Rd | Chi phí vốn vay |
| Hurdle Rate | — | Tỷ suất sinh lời tối thiểu |
| NPV | Net Present Value | Giá trị hiện tại ròng |
Comparison Across Languages
| Tiếng Việt | English | 中文 | 日本語 |
|---|---|---|---|
| Chi phí sử dụng vốn | Cost of Capital | 资本成本 | 資本コスト |
| Chi phí vốn vay | Cost of Debt | 债务成本 | 負債コスト |
| Tỷ suất sinh lời | Rate of Return | 回报率 | 収益率 |
Vay vốn kinh doanh qua BizLoan
Việc tối ưu chi phí sử dụng vốn (WACC) là bước quan trọng trước khi doanh nghiệp quyết định vay vốn mở rộng sản xuất kinh doanh. BizLoan là nền tảng matching giúp SME so sánh đề xuất lãi suất từ nhiều lender, từ đó lựa chọn phương án vay có chi phí vốn thấp nhất phù hợp với dự án đầu tư. Lãi suất và hạn mức cụ thể do từng lender quyết định dựa trên hồ sơ tài chính doanh nghiệp. Đăng ký so sánh lãi suất vay qua BizLoan.