It is widely known that private companies have a much higher cost of capital compared to their public counterparts.

Pubic companies have relatively easy access to public capital markets, whereas private capital markets are not as easy to access and are often complex for private companies.

But how do you truly measure the cost of capital for a private company?  Or is it measurable at all?  There are many who would answer, "yes" and a recent study by Pepperdine University on the cost of capital of a private company would seem to agree.

However, I disagree.  I don’t think it is measurable, although I know it is very high.

The reason is that owners of private companies have their whole livelihood and that of their families riding on their decisions they make about running their businesses. They also often guarantee the company’s debt.

The reality is that their decisions bear much more weight because they cannot afford to be wrong.

So then, how does one measure the cost of losing everything if you are wrong?

Show me the calculator to figure that out.

Do you agree that it is difficult to truly measure the cost of capital in a private company?  Share in the comments.