As one of the major investment companies in Indonesia, PT Bakrie & Brothers Tbk (called BB) is considering a major expansion of the business, growth through internal investment (organic), or invests by acquiring other companies (inorganic). From the firm's perspective, the investors' expected return is a cost of using the funds, called the cost of capital. A variety of factors influencing a firm's cost of capital, such as level of interest rates, tax policies, and the regulatory environments. The degree of risk in the projects it undertakes and the types of funds it raises both have a profound effect on its cost of capital.
