This case deals with the estimation of cost of capital and its components. Students will learn how to estimate the cost of debt, the cost of preferred stock, and the cost of common stock. They will learn how to compute the weight of each cost of capital component and then they will estimate the overall cost of capital. Finally, they will discuss why certain types of capital are more expensive than others. This is a hands-on experience for students who want to learn more about corporate financing costs.
Weighted-average cost of capital (WACC)
http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/weighted-average-cost-capital-wacc-2905
Weighted average cost of capital - WACC
http://www.investopedia.com/terms/w/wacc.asp
Cost of equity
http://www.investopedia.com/terms/c/costofequity.asp
Capital Asset Pricing Model - CAPM
http://www.investopedia.com/terms/c/capm.asp
Cost of Debt
http://www.investopedia.com/terms/c/costofdebt.asp?utm_term=cost+of+debt&utm_content=sem-unp&utm_medium=organic&utm_source=&utm_campaign=&ad=&an=&am=&o=40186&askid=&l=dir&qsrc=999&qo=investopediaSiteSearch
Kaya, H. D. (2016). Cost of Capital and its Components: An Application. International Journal of Academic Research in Business and Social Sciences, 6(5), 213-221.
Copyright: © 2016 The Author(s)
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