Business Finance Chapter 8 Cost of Capital 8.2 A Weighted-Average Cost of Capital

A Weighted Average Cost of Capital - Business Finance - ثاني ثانوي

An Introduction to Basic Finance

1.1 The Divisions of Finance

1.2 Key Financial Concepts

1.3 Finance and Other Business Disciplines

Summary

The Role of Financial Markets and Financial Intermediaries

2.1 Financial Markets

2.2 Financial Intermediaries

2.3 Regulation of Financial Institutions

Summary

Analysis of Financial Statements

3.1 General Accounting Principles

3.2 The Balance Sheet

3.3 The Income Statement

3.4 Statement of Cash Flows

3.5 Financial Statement Analysis

3.6 Liquidity Ratios

3.7 Activity Ratios

3.8 Profitability Ratios

3.9 Leverage Ratios

3.10 Coverage Ratios

3.11 Limitations of Accounting Data

Summary

An Introduction to Financial Markets

4.1 Markets

4.2 The Mechanics of Investing in Securities

4.3 Special Security Purchases

4.4 Measures of Securities Prices

4.5 Foreign Securities

4.6 Competition in the Securities Markets

Summary

Opportunity Costs and the Time Value of Money

5.1 Opportunity Costs

5.2 The Future Value of a Single Amount

5.3 The Future Value of a Series of Amounts (Annuity)

5.4 The Present Value of a Single Amount

5.5 The Present Value of a Series of Amounts (Annuity)

5.6 Other Time Value of Money Situations

Summary

Risk and Its Measurements

6.1 Risk

6.2 The Return on an Investment

6.3 The Sources of Risk

6.4 Risk Measurements

6.5 Risk Management Strategies

Summary

Stock and Bonds

7.1 Sources of Funding

7.2 Common Stock

7.3 Dividend Policy

7.4 Preferred Stock

7.5 Bonds

7.6 Retiring Debt

Summary

Chapter 8 Cost of Capital

Cost of Capital

8.1 Cost of Capital Components

8.2 A Weighted-Average Cost of Capital

8.3 The Optimal Capital Structure

8.4 Other Capital Structure Issues

Summary

Glossary

An Introduction to Basic Finance

1.1 The Divisions of Finance

1.2 Key Financial Concepts

1.3 Finance and Other Business Disciplines

Summary

The Role of Financial Markets and Financial Intermediaries

2.1 Financial Markets

2.2 Financial Intermediaries

2.3 Regulation of Financial Institutions

Summary

Analysis of Financial Statements

3.1 General Accounting Principles

3.2 The Balance Sheet

3.3 The Income Statement

3.4 Statement of Cash Flows

3.5 Financial Statement Analysis

3.6 Liquidity Ratios

3.7 Activity Ratios

3.8 Profitability Ratios

3.9 Leverage Ratios

3.10 Coverage Ratios

3.11 Limitations of Accounting Data

Summary

An Introduction to Financial Markets

4.1 Markets

4.2 The Mechanics of Investing in Securities

4.3 Special Security Purchases

4.4 Measures of Securities Prices

4.5 Foreign Securities

4.6 Competition in the Securities Markets

Summary

Opportunity Costs and the Time Value of Money

5.1 Opportunity Costs

5.2 The Future Value of a Single Amount

5.3 The Future Value of a Series of Amounts (Annuity)

5.4 The Present Value of a Single Amount

5.5 The Present Value of a Series of Amounts (Annuity)

5.6 Other Time Value of Money Situations

Summary

Risk and Its Measurements

6.1 Risk

6.2 The Return on an Investment

6.3 The Sources of Risk

6.4 Risk Measurements

6.5 Risk Management Strategies

Summary

Stock and Bonds

7.1 Sources of Funding

7.2 Common Stock

7.3 Dividend Policy

7.4 Preferred Stock

7.5 Bonds

7.6 Retiring Debt

Summary

Chapter 8 Cost of Capital

Cost of Capital

8.1 Cost of Capital Components

8.2 A Weighted-Average Cost of Capital

8.3 The Optimal Capital Structure

8.4 Other Capital Structure Issues

Summary

Glossary

8.2 A Weighted-Average Cost of Capital

Key Terms Capital structure

Capital structure

Weighted-average cost of capital

8.2 A Weighted-Average Cost of Capital

How might a financial manager try to minimize the cost of capital?

Management has calculated that the current cost of each type of financing is:

8.2 A Weighted-Average Cost of Capital

Note that the total of the proportions should add up to 100%. To find the

What would be the weighted-average cost of capital in this situation?

8.2 A Weighted-Average Cost of Capital

A firm entirely financed by common stock with no debt has a weighted-average cost of capital equal to the cost of equity.

In the weighted-average formula, the least expensive financing source will be the:

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