2.10 Stud%20Week%2011%20Lect%202%20Cost%20of%20Capital

# 2.10 Stud%20Week%2011%20Lect%202%20Cost%20of%20Capital -...

This preview shows pages 1–8. Sign up to view the full content.

Cost of Capital – pt 3 Week 11 Lecture 2

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Topics Covered Measuring Capital Structure Weights Calculating Required Rates of Return Calculating WACC Marginal Cost of Capital Using WACC
Cost of Capital - review Cost of Capital  - The return the firm’s investors  could expect to earn if they invested in assets  with comparable degrees of risk.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
WACC - review Three Steps to Calculating Cost of Capital 1. Calculate the value of each security as a  proportion of the firm’s  ________ value. 2. Determine the  ____________________     __________________ 3. Calculate a  _________________  of these  _______________ .
External Equity When must External Equity be used? When there are  _________  projects than we have  ______________  to finance them while  maintaining  the  _________________   Retained Earnings Breakpoint How much you can  _________________    _________________

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Cost of Newly Issued Common  Stock External equity, r e based on the cost of  ______________ adjusted for  ________________  (the expenses of  selling new issues)
than the cost of issuing new common stock? When a company issues new common stock  they also have to pay  ________   ______  to the  underwriter. Issuing new common stock may send a

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 12/23/2009 for the course BCOM FINC 201 taught by Professor Debrak.reed during the Spring '09 term at Canterbury.

### Page1 / 25

2.10 Stud%20Week%2011%20Lect%202%20Cost%20of%20Capital -...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online