Financial Management: Principles and Applications, 13/e

Chapter 14 The Cost of Capital

Chapter Outline

1. 14.1 The Cost of Capital: An Overview (pgs. 446–449)

   1. Objective 1. Understand the concepts underlying the firm’s overall cost of capital and the purpose for its calculation.

2. 14.2 Determining the Firm’s Capital Structure Weights (pgs. 449–452)

   1. Objective 2. Evaluate a firm’s capital structure and determine the relative importance (weight) of each source of financing.

3. 14.3 Estimating the Cost of Individual Sources of Capital (pgs. 453–462)

   1. Objective 3. Calculate the after-tax cost of debt, preferred stock, and common equity.

4. 14.4 Summing Up: Calculating the Firm’s WACC (pgs. 463–464)

   1. Objective 4. Calculate a firm’s weighted average cost of capital.

5. 14.5 Estimating Project Costs of Capital ...