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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:

  1. Includes all expenses incurred to acquire long-term assets
  2. Often involves significant upfront investments
  3. Can include costs for land, buildings, equipment, and infrastructure
  4. May also cover costs of installation and initial setup
  5. Typically depreciated over the assets useful life
  6. Important factor in investment decisions and project evaluations
  7. Can impact a companys financial statements and tax obligations

Understanding and managing capital costs is crucial for effective financial planning and investment decision-making.