What factor does not influence a company's cost of capital?

The choice regarding company size as a factor that does not influence a company's cost of capital is based on the idea that a company's cost of capital is primarily determined by market conditions rather than its absolute size.

The cost of capital reflects the return that investors require from their investment in the company, which can be influenced by several factors. The risk-free rate of return is a benchmark for what investors could earn without risk, and changes in market interest rates directly affect the cost of borrowing for companies. Investor expectations play a role in determining how much they require in return for their investment, factoring in the perceived risk of the company relative to its industry and market.

While company size can have implications regarding economies of scale, leverage, and market perception, it does not directly adjust the fundamental components that determine the cost of capital such as the risk-free rate, market interest conditions, or the investors’ required return. Thus, while company size can influence overall risk perception, it is not a direct determinant of the cost of capital itself.