Unit 5c - Cost of Capital.pptx (CFM22A2)

T C F M 22A2
G EMEN
C I A L M A NA
FIN AN
20 16

, pt e r 11 )
it al (Cha
t of Ca p
: Cos
Unit 5c

, LEARNING OUTCOMES:

 Discuss the importance of the cost of capital for an entity

 Identify, calculate and interpret the various costs of capital




UNIT 5c : Cost of Capital

3

, ASSESSMENT CRITERIA

 Perform advanced calculations to determine a firm’s cost of equity
capital as well as debt capital including the various debt instruments
available;

 Understand the concept of a firm’s overall cost of capital and
perform advanced calculations based on market values and costs of
different instruments to calculate a WACC; and

 Understand the pitfalls of overall cost of capital and how to manage
and adjust them for different risk scenarios.




UNIT 5c : Cost of Capital