chap 14 1.Understand the concepts underlying the firm’s overall cost of capital and the purpose for...

chap 14

1.Understand the concepts underlying the firm’s overall cost of capital and the purpose for its calculation.

2.Evaluate a firm’s capital structure, and determine the relative importance (weight) of each source of financing.

3.Calculate the after-tax cost of debt, preferred stock, and common equity.

4.Calculate a firm’s weighted average cost of capital , Discuss the pros and cons of using multiple, risk-adjusted discount rates. Describe the divisional cost of capital as a viable alternative for firms with multiple divisions and Adjust NPV for the costs of issuing new securities when analyzing new investment opportunities.

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