The cost of capital or weighted average cost of capital concept is nothing new as its often being used in investment appraisals exercise and in the Economic Value Added model ( for maximization of shareholders’ wealth)
This article looks at what is this Cost of Capital or Weighted Average Cost Of Capital and how to compute [...]
Continue reading about What Is A Company’s Weighted Average Cost Of Capital & How To Compute WACC
Earlier article on the computation of cost of capital for retained earnings/existing common equity/stocks
This article looks at how to compute the cost of capital from newly issued common stocks:
Method To Compute Of Cost Of EXTERNAL Common Equity
The cost of issuing new common stock(Kne) is similar to the cost of internal equity except that a company [...]
One of the source of financing is the retained earnings or existing share equity(Ke) of a firm. Let’s look at how we can the firm’s cost of capital from retained earnings/ internal common stocks:-
Methods To Compute Of Cost Of INTERNAL Common Equity
Dividend Growth Model
Capital Asset Pricing Model (CAPM)
Dividend Growth Model
The value of common stock is [...]
Before determining what is the firm’s cost of capital, the manager needs to understand some of the major reasons or dependents for the firm’s cost of capital to rise or fall:
Some of the major factors or dependents that may impact the cost of capital are:
Company’s business risk
The higher a firm’s business risk, the higher the [...]
Continue reading about Major factors Contributing to A High or Low Cost Of Capital
Major Factors which increase or decrease a company’s cost of capital
Cost Of Capital For Common stocks-Retained Earnings or Existing Equity
Cost Of Capital For External Common Equity
What is Weighted Average Cost Of Capital & how to compute it.
Continue reading about Snapshots Of Articles Under Cost Of Capital/Weighted Average Cost Of Capital
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