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## Cost of Capital 

Cost of capital represents the minimum rate of return that must be earned by invested capital in order to create value. The weighted average cost of capital (WACC) is calculated in order to simulate an adequate market rate of return. The cost of capital is calculated as the weighted average of the cost of equity and borrowed capital. 

## Continued Value Increase 

The sustained positive development is also evidenced in PUMA’s value increase. 

As a result of the successful year 2004, gross cashflow (after tax) rose from € 201.4 million to € 279.6 million, an increase of 38.8%. 

Gross investment increased 41.4%, from € 463.3 million to € 655.1 million, while net liquidity rose from € 114.9 million to € 272.1 million, or by 136.9%. 

The cashflow return on investment (CFROI) in 2004 was 42.7% compared to 43.5% in the previous year. In consideration of the cost of capital, the absolute value contribution, i.e., the economic value added, rose to € 222.3 million (previous year: € 166.3 million). 

## Calculation of Weighted Average Capital Costs (WACC) 

<img src='content_image/33202.jpg'>

Prior years were adjusted according to the new methodology 

<img src='content_image/33205.jpg'>

