Every business needs capital, and capital has a cost. Debt and equity providers demand a return, and the combination is the organization's cost of capital. Review how to calculate the cost of capital, use it to make superior business decisions every day and some common ways organizations misuse this number. Who should understand your organization's cost of capital? You should! Even if you are not yet the CFO, you need to understand the cost of capital and its use. Knowing the cost of capital allows managers to literally "get the biggest bang for the buck."