why is it important to know the cost of capital figure for a company?

Answer 1

Essentially, Cost of Capital is what it costs the Business for the funds it has 'borrowed' to operate ...

Funds come from a number of sources and have different costs. Normally the source is classified as either Equity (i.e. Shares == cost is (expected) Dividends, expressed as a percentage) or Debt (i.e. Loans = Bank Loan / Mortgage / Bonds == cost is the Interest Rate)

Once you know this you can decide what the Companies prospects are - for example, if the overall Cost of Capital is less than PBIT, then the Company can 'borrow' more money in order to fund expansion etc. since it is generating more than it costs...

see also EBITDA