The research presented in this paper is intended to help explain the capital costs generated by companies when they raise funds to support business growth and future market share. These incurred costs are known as capital costs which can be estimated through the cost of equity capital using the dividend growth model approach or the safety line approach. Each method will be discussed, including its advantages and disadvantages. This document will also explain the cost of debt, the cost of preferred stock, and the weighted average cost of capital with tax adjustments. Finally, there will be a summary regarding the costs associated with raising capital funds for companies as it relates to their investors such as preferred stockholders, stockholders and bondholders. The old saying, “It takes money to make money,” also applies to individuals. like corporations. There are times when companies anticipate how certain investment projects will require the need to raise capital through corporate loans or the sale of corporate stocks or bonds in order to position themselves for future supply and demand. If the company is deemed to be a good value, then there are many investors willing to provide funds for such investment projects, but not without costs to the company known as capital costs or cost of capital. These costs associated with the use of external funds have financial implications on the company profits necessary to meet the return expectations of investors and owners while maintaining good value. Before a company can make a financial decision to raise external funds, it must first calculate the costs it will incur to acquire those funds. If a company decides to sell common stock to raise capital, the costs to the company... are middle of the paper... maintaining a good market value. The main objective of a company will always be to maximize profits while minimizing debt. Works Cited (2008). Retrieved February 25, 2014, from FinPlan.com: http://finplan.com/invest/divgrowmod.asp(2014). Retrieved February 25, 2014, from Investing Answers: http://www.investinganswers.com/financial-dictionary/stock-valuation/cost-equity-2476Jan, O. (2013). Accounting explained. Retrieved February 26, 2014, from AccountingExplained.com: http://accountingexplained.com/misc/corporate-finance/waccPeavler, R. (2014). Corporate finance. Retrieved February 26, 2014, from About.com: http://bizfinance.about.com/od/cost-of-capital/qt/calculate-the-cost-debt-capital.htmRoss, S.A., Westerfield, R.W., & Jordan , B. D. (2011). Essentials of corporate finance (7th ed.). New York, New York, USA: McGraw-Hill/Irwin. Retrieved January 19, 2014