the cost of capital

... Understand the cost of capital and the specific sources of capital associated with the cost of capital • Determine the cost of debt and preference share capital • Calculate cost of ordinary share capital, ... / Principles of Managerial Finance / 6th edition Weighted Average Cost Of Capital Duchess Limited has calculated the costs of the various types of capital to be: The company uses the following ... next dollar of total new financing  Is an increasing function of the level of total new financing  The ‘break point’ is the level of total new financing at which the cost of one of the financing...

Ngày tải lên: 16/12/2013, 14:57

... shows that the cost of capital of the firm depends on four factors: the risk free rate, the aggregate risk tolerance of the market, the expected cash flow of the firm, and the covariance of the firm’s ... b ) Clearly the cost of capital for the firm will be somewhere in between the cost of capital j for the riskless component and the cost of capital for the risky component But if the firm’s expected ... increases the variance and covariances, which increases the cost of capital The equilibrium is then the net of these two effects In our example, the overall effect decreases the cost of capital. 22...

Ngày tải lên: 06/03/2014, 21:20

... by the U.S Savings & Loan crisis, the collapse of Japan Inc after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the ... amid the wreckage of the 2008 crisis, 10 • THE COST OF CAPITALISM with the Great Moderation dead, policy makers, business leaders, and investors need to come to understand the insights of Hyman ... economists joined together in a cele- bration of the Goldilocks economy With the dismal record of the 1970s as their point of comparison, mainstream analysts focused on the not-too-hot, not-too-cold...

Ngày tải lên: 20/06/2014, 20:20

... begun in the last cycle The lesson seemed simple: keep inflation low, ignore the financial markets unless they need rescue, and bask in the glory of the Great Moderation 78 • THE COST OF CAPITALISM ... added to the Fed’s list of potentially destabilizing excesses Why? Sadly, it was not the force of ideas that carried the day It was the end of the Great Moderation The breathtaking nature of the financial ... requiring them to staff a commercial loan of ce 88 • THE COST OF CAPITALISM Over the mid-1980s, thrifts became major buyers of junk bonds They did so with little serious analysis of the underlying...

Ngày tải lên: 20/06/2014, 20:20

... around the emperor’s palace in Tokyo was equal to the value 96 • THE COST OF CAPITALISM of all the land in the state of California! The shares of Japanese car makers reached values that suggested these ... 104 • THE COST OF CAPITALISM the one case imposing capital controls and in the other aggressively supporting not only the currency but the stock market too Those measures worked, though there ... bubble!” I looked at the others; they looked down at their shoes And for the remainder of the two hours the group exchanged pleasantries In the end the group decided that the big risk going forward,...

Ngày tải lên: 20/06/2014, 20:20

... years of the Great Depression He too was convinced at the time that he was doing the right thing 144 • THE COST OF CAPITALISM In the United States, a vocal group of economists supported the ECB ... gripped the United States and then became a world recession The dynamics that precipitated the U.S recession, the global capital markets crisis, and the worldwide downturn, are the subject of the ... rates had forced even the most creative mortgage providers to lift their teaser rates the cost of money forced them to make the adjustment Bernanke’s Calamity and the Onset of U.S Recession • 141...

Ngày tải lên: 20/06/2014, 20:20

... writer of the insurance If things go as planned, the buyer pays the insurer the premium If things go awry, the insurer pays the buyer Either way, one of the two parties gets the money promised in the ... with the stock price valued at next to nothing, seemed to be the clear fate it faced But the Treasury and the Fed, I was convinced, 154 • THE COST OF CAPITALISM recognized the severity of the ... 156 • THE COST OF CAPITALISM By mid-2007, the CDO market had the implausibly high value of $55 trillion It amounted to a mountain of wagers about corporate bonds that dwarfed the value of the underlying...

Ngày tải lên: 20/06/2014, 20:20

... moment is the difference between the value of its assets and the value of its liabilities In Japan in the 1990s many bank assets fell in value by 80 percent In 182 • THE COST OF CAPITALISM the United ... brain skills Looking through the details of the question to get to an overarching sense of the issue is at the heart of right brain thinking Out of the Mouths of Babes The best right brain thinking ... on the Eve of the Crisis • 175 • They train their sights on the real economy and inflation, giving Wall Street sideshow status The Taylor rule best captures their efforts The equation directs the...

Ngày tải lên: 20/06/2014, 20:20

... part of the mainstream formulation The simple truth is that theorists owe this to the policy-making world The sooner they deliver it, the better Global Policy Risks in the Aftermath of the 2008 ... free-flowing capital markets and the strong growth that they financed gave rise to the long string of successes that were celebrated throughout the 1990s and into the middle years of the first decade of the ... in the Aftermath of the 2008 Crisis • 211 housing markets would fall into deep depression That’s because of the dysfunctional state of affairs that now grips the world of housing finance Furthermore,...

Ngày tải lên: 20/06/2014, 20:20