But what did this mean for the overall cost of capital, which is the real question?

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If a buyback raises the debt-to-equity ratio, it can lower the firm's overall cost of capital (because in most countries interest payments, unlike dividends, are tax deductible).

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The major stakeholder, Malkin Holdings , has owned the iconic office tower for over 50 years and by combining other Malkin Holding properties, the new REIT is aiming to create broader diversification and a substantially lower overall cost of capital.

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Those policies are based on exactly the kinds of administrative measure that Naughton highlights, and as yet the government has not used widely recommended market mechanisms like raising interest rates (though the new real estate measures do directly raise mortgage rates and the overall cost of capital for housing).

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Accounting ignores these critical details while finance incorporates them by using cash flow metrics rather than earnings metrics and a cost of capital measure that reflects current interest rates plus a component for a company's overall riskiness.

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