Financial Management: Core Concepts, Third Edition

Chapter 11 The Cost of Capital

AT a Glance

1. LO1 Understand the different kinds of financing available to a company: debt financing, equity financing, and hybrid equity financing. Debt financing includes capital raised through borrowing from financial institutions and other sources and through selling bonds. Equity financing includes capital raised through selling common stock to individual and institutional investors and through the use of retained earnings. Hybrid equity financing includes capital raised through selling preferred stock.

2. LO2 Understand the debt and equity components of the weighted average cost of capital (WACC) and explain the ...