Throughout this book, we discuss different types of financing. In this chapter, we examine issues including the cost of capital and costs associated with debt, equity, and retained earnings with illustrative tables to review the overall capital structure. Also presented are financial leverage, hurdle rates, and treasury stock. The chapter ends with a discussion regarding financial analysis.
Cost of Capital
Every business, public or nonpublic, large or small, will eventually need some sort of capital (funds). This funding may be required to finance working capital, long-term equipment acquisitions, or other purposes. The effective utilization of all business investments must occur, and one ...