l1 37 cost of capital

This class was created by Brainscape user Steven Popovic. Visit their profile to learn more about the creator.

Decks in this class (12)

a calculate and interpret the weighted average cost of capital (WACC) of a company;
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b describe how taxes affect the cost of capital from different capital sources;
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c explain alternative methods of calculating the weights used in the WACC, including the use of the company’s target capital structure;
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d explain how the marginal cost of capital and the investment opportunity schedule are used to determine the optimal capital budget;
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e explain the marginal cost of capital’s role in determining the net present value of a project;
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f calculate and interpret the cost of debt c
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g calculate and interpret the cost of noncallable, nonconvertible preferred stock;
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h calculate and interpret the cost of equity capital using the capital asset pricing model approach, the dividend discount model approach, and the bond-yield- plus risk-premium approach;
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i calculate and interpret the beta and cost of capital for a project;
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j describe uses of country risk premiums in estimating the cost of equity;
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k describe the marginal cost of capital schedule, explain why it may be upward-sloping with respect to additional capital, and calculate and interpret its break-points;
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l explain and demonstrate the correct treatment of flotation costs.
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l1 37 cost of capital

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