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Financial Performance
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WACC
The cost of capital is a significant factor in the financial decision making for the top managers of an organization. It helps in designing an optimal and balanced capital structure for an organization (Pratt & Grabowski, 2008). The cost of capital acts as a useful source in the implementation of the capital budgeting decisions. In addition to that, it helps in the evaluation of the financial performance through the comparison of funds raised to undertake a project and actual profitability. The concept of capital is utilized as a tool of making other significant financial decisions (Lambert, Leuz, & Verrecchia, 2007). The cost of capital assists the top managers with knowledge of firm’s inherent risks and the expected income. Moreover, it acts as a proportional study of sources of finance.
2. Debt v Equity
Debt offering are more common that equity offering. An item that manages to be a debt is considered to be an interest rate while an item that manages to be equity is referred as an internal rate of return. When individuals discuss of debt being cheaper as compared to equity, it basically referrers to the cost incurred by a company or a business to finance require (Covas & Haan, 2011). When making a comparison on the cost of debt to that of equity, the interest to be paid over the lifetime of the loan is compared to the portion of profits sacrificed over the lifetime of the company. Considering that the cost of debt is significantly finite, it becomes cheap that equity for organization requires better results.

A debt is considered much safer as compared to equity due to several fallbacks when a company fails to perform well.
References
Pratt, S. P., & Grabowski, R. J. (2008). Cost of capital. John Wiley & Sons.
Lambert, R., Leuz, C., & Verrecchia, R. E. (2007). Accounting information, disclosure, and the cost of capital. Journal of accounting research, 45(2), 385-420.
Covas, F., & Den Haan, W. J. (2011). The cyclical behavior of debt and equity finance. American Economic Review, 101(2), 877-99.