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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 76.04-0.3%Nov 26 3:59 PM EST
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To: RetiredNow who wrote (36871)6/1/2000 5:22:00 PM
From: GVTucker  Read Replies (2) of 77400
 
mindmeld, thanks for the additional detail in your response.

Here is where I see a contradiction:

Now Cisco's cost of capital is not their borrowing rate, since they use their stock to acquire which is how they grow. So we'd have to look at opportunity costs, such as what if we invested the money elswhere.

and

And cost of capital won't be interest rates.

Fixed income instruments are competitive securities with Cisco common stock. If rates rise, then the expected return of these fixed income instruments also rises. Thus, the opportunity cost of owning Cisco stock rises, going to your first statement.

Which contradicts the second statement.
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