In: Finance
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.