Join us in germany we are especially looking for

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Unformatted text preview: ef that the innovations we make on a daily basis can have a profound effect on making the world a better place for people, business and society. Join us. In Germany we are especially looking for graduates as Integration Engineers for • Radio Access and IP Networks • IMS and IPTV We are looking forward to getting your application! To apply and for all current job openings please visit our web page: www.ericsson.com/careers Download free ebooks at bookboon.com 43 Corporate Finance Capital budgeting Solving for r yields the cost of preferred stocks: (38) Cost of preferred stocks rpreferred DIV P Thus, the cost of a preferred stock is equal to the dividend yield. 6.2 Cost of capital for new projects A new investment project should be evaluated based on its risk, not on company cost of capital. The company cost of capital is the average discount rate across projects. Thus, if we use company cost of capital to evaluate a new project we might: - Reject good low-risk projects Accept poor high-risk projects True cost of capital depends on project risk. However, many pro...
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