Which factor does NOT influence the cost of capital for a business?

The cost of capital for a business is influenced by various factors that impact the financial environment in which the business operates. Market interest rates, for instance, determine the cost of borrowing. Higher interest rates generally lead to a higher cost of capital because the business has to pay more in interest on any debt incurred.

Business risk is another critical factor. A company that operates in a volatile industry may face higher costs of capital because investors perceive it as a riskier investment. This perception leads to a required return that is higher to compensate for that risk.

Tax rates also play a role in determining the cost of capital, particularly for debt financing. Interest on debt is often tax-deductible, which effectively lowers the cost of capital for firms that utilize debt financing.

In contrast, product prices do not directly influence the cost of capital. While they may affect a company's sales, profitability, and overall financial health, they do not have a direct impact on how much it costs the company to acquire funds for its operations. The cost of capital is primarily concerned with the financial aspects of capital acquisition rather than the pricing strategies for a company's goods or services.