Cost of money

In the general framework for mapping resources proposed by Benoit F Leleux the costs of money may differ greatly depending on the source of the fund. This is add odds with the traditional view that the cost of money fundamentally is an Opportunity costs, driven entirely by the risk of the project, irrespective of the capital supplier. This difference has the following root causes:

• In a startup company there is a high level of information asymmetry. Confronted with new products, new markets and different management skills different capital suppliers may perceive and value these elements differently
• If financing , provision of other services come bundled differently, the costs of capital also may vary greatly

Part of: General framework for mapping resources