Day 24-Ch 9-11.30.11

Day 24-Ch 9-11.30.11 - Business Management 201 Day 24...

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Unformatted text preview: Business Management 201 Day 24 Chapter 9: Cost of Capital November 30, 2011 Day 24 Agenda 1) POW #11: Risk & Return Due Friday at 11:59 PM 2) Reading Quiz Ch 13 Due Monday at 8:00 AM 3) Submit Emailed Book Assignment Hard Copies TODAY 4) ALL Late Work Due by December 7 at 11:59 PM 5) Final Exam Review Material Posted by this Weekend 6) Final Exam Reviews Thursday 5:00 PM-7:00 PM 3108 JKB—Vote? Friday 11:00 AM-1:00 PM 151 TNRB (Devin) Saturday 9:00 AM-11:00 AM 151 TNRB (Rebecca) 1) Email Questions for Final Exam Review by Tuesday 2) Please Complete BYU Course Evaluation 3) Chapter 9: Cost of Capital Thought for the Day “The longer I live, the more I realize the impact of attitude on life. Attitude is more important than facts. It is more important than the past, than education, than money, than circumstances, than failures, than successes, than what other people think or say or do. It is more important than appearance, giftedness, or skill. It will make or break a company... a church... a home. The remarkable thing is we have a choice every day regarding the attitude we will embrace for that day. We cannot change our past... we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% how I react to it. And so it is with you... we are in charge of our attitudes.” ~Charles Swindoll, Evangelical Christian Pastor, Author, Educator and Radio Preacher Chapter 9: Chapter 9: Cost of Capital Cost of Capital Mind Map Why?: An important question is, “How high does our return have to be in order to justify an investment in the project?” In this topic area, we consider the costs of financial capital to the firm. In general, the returns a firm earns must be high enough to cover the cost of capital in order to avoid destroying shareholder value. Mind Map Learning Objectives: – Articulate the relationship between the cost of funds and return – Describe how a firm can increase value – Calculate the weighted average cost of capital (WACC) – Discuss when the WACC is an appropriate discount rate for potential investment projects Mind Map Key Words/Concepts: – Cost of Capital/WACC – Component Costs – Tax Shield – Appropriate Use of WACC In order to determine whether a capital investment will increase the value of a firm, you have to understand the opportunity cost of the capital....
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This note was uploaded on 01/06/2012 for the course BUS M 201-1 taught by Professor Jennlarson during the Fall '11 term at BYU.

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Day 24-Ch 9-11.30.11 - Business Management 201 Day 24...

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