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

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

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Cost of Capital – pt 3 Week 11 Lecture 2
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Topics Covered Measuring Capital Structure Weights Calculating Required Rates of Return Calculating WACC Marginal Cost of Capital Using WACC
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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.
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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  _______________ .
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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  _________________    _________________
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Cost of Newly Issued Common  Stock External equity, r e based on the cost of  ______________ adjusted for  ________________  (the expenses of  selling new issues)
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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 
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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.

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

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