the cost of raising capital journal of financial research

... subjective risk-adjusted costs of capital • List some problem areas in estimating the cost of capital Chapter 9 The Cost of Capital LEARNING OBJECTIVES Trang 2Chapter 9 uses the rate of return concepts ... chapters, along with the concept of the weighted average cost of capital (WACC), to develop a corporate cost of capital for use in capital budgeting.We begin by describing the logic of the WACC, and ... affect the WACC, how to adjust the cost of capital for risk, and estimating project risk We conclude the chapter with a discussion on some problem areas in the cost of capital The details of what

Ngày tải lên: 01/07/2014, 21:28

... Chapter 11 The Cost Of Capital Learning Goals: • 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, convert to cost of new ordinary shares and cost of retained earnings • Find the weighted average cost of capital and discuss the alternative ... Finding The Cost Of Ordinary Share Equity Capital Cost Of Retained Earnings:  Abbreviated as rr  Is the same as the cost of an equivalent fully subscribed issue of additional equity Therefore:

Ngày tải lên: 16/12/2013, 14:57

... in theeducation variables, only the direct effects of the years of schooling of the head of thehousehold, the years of schooling of the money manager and the average schooling of theheads of the ... Sixty-eight percent of the banks in the Northeast and 81% of the banksin the Central region make loans, while only 35% of the banks in the Northeast and 53% of the banks in the Central region offer savings ... All of the estimates also include the following household level variables: the age of thehousehold head, the age of the household head squared, the number of adult females inthe household, the

Ngày tải lên: 06/03/2014, 10:20

... discuss the effects of disclosure regulation on the cost of capital of firms Based on our framework, increasing the quality of mandated disclosures should in general move the cost of capital ... disclosure level and the expected cost of equity capital, Journal of Accounting Research 40, 21-41 Brown, S., 1979, The effect of estimation risk on capital market equilibrium, Journal of Financial and ... models of asset pricing, the expected rate of return on a firm j’s stock is the rate, Rj, that equates the stock price at the beginning of the period, Pj, to the cash flow at the end of the period,

Ngày tải lên: 06/03/2014, 21:20

... Risk-Adjusted Cost of Financial Distress 2571 Table IV Risk-Adjusted Costs of Financial Distress This table reports our estimates of the NPV of the costs of financial ... costs of financial distress against the tax and incentive benefits of debt, the costs of financial distress seem low If the costs are 10 percent, then the expected costs ... percentage of predistress firm... benefits of debt and costs of financial distress The second column of Table IV presents our estimates of the risk-adjusted cost of financial

Ngày tải lên: 23/03/2014, 02:20

... in cost of capital. Most firms incorporate tax effects in the cost of capital. Therefore, focus on after-tax costs. Only cost of debt is affected. 5 B02022 – Chapter 7 – The Cost of Capital ... so they are not included in the calculation of the cost of capital. We do adjust for these items when calculating the cash flows of a project, but not when calculating the cost of capital. ... Chapter 7 – The Cost of Capital 23/8/2012 CHAPTER 7 The Cost of Capital  7.1 Cost of Capital Components - Debt - Preferred Equity - Common Equity  7.2 Weighted Average Cost of Capital

Ngày tải lên: 12/07/2014, 14:12

... incorporate tax effects in the cost of capital Therefore, focus on after-tax costs. Only cost of debt is affected. Trang 5(embedded) costs or new ( marginal ) costs? The cost of capital is used primarily ... not sources of funding that come from investors, so they are not included in the calculation of the cost of capital. We do adjust for these items when calculating the cash flows of a project, ... 29Determining the Weights for the WACCThe weights are the percentages of the firm that will be financed by each component. If possible, always use the target weights for the percentages of the firm

Ngày tải lên: 30/10/2014, 08:23

... incorporate tax effects in the cost of capital Therefore, focus on after-tax costs. Only cost of debt is affected. Trang 5(embedded) costs or new ( marginal ) costs? The cost of capital is used primarily ... not sources of funding that come from investors, so they are not included in the calculation of the cost of capital. We do adjust for these items when calculating the cash flows of a project, ... 29Determining the Weights for the WACCThe weights are the percentages of the firm that will be financed by each component. If possible, always use the target weights for the percentages of the firm

Ngày tải lên: 06/04/2015, 19:41

... alter the relative prices of shars until the WACCs become equal •The level of gearing is therefore irrelevant to the WACC and the value of the firm 19 The The Cost Cost of of Equity Equity Capital Capital 1. ... But: But: ••there theremay maybe bemore morethan thanone onevalue valuefor forthe theIRR IRRthat that satisfies satisfiesthe theNPV NPVequation; equation;ififthe thesign signof ofcash cashflows flows changes changesmore morethan thanonce oncein inthe thelife lifeof ofthe theproject, project, there theremay maybe bemultiple multiplesolutions solutions ••the theNPV NPVrule ruleuses usesactual actualopportunity opportunitycost costof ofcapital capital as asthe thediscount discountrate; rate;the theIRR IRRrule ruleassumes assumesthe the shareholders shareholderscan caninvest investat atthe theIRR IRR ••IRR IRRisisexpressed expressedin interms termsof ofaapercentage percentagerate rateof of return, return,ititignores ignoresthe theproject’s project’sabsolute absoluteeffect effecton onthe the wealth wealthof ofshareholders shareholders 15 The The Cost Cost of of Capital Capital A A firm firm will will invest invest only only ifif the the expected expected rate rate of of ... the relative prices of shars until the WACCs become equal The level of gearing is therefore irrelevant to the WACC and the value of the firm 19 The The Cost Cost of of...

Ngày tải lên: 04/10/2015, 20:08

... capital is riskier than equity capital, the cost of debt isalways greater than the WACC b Because of the risk of bankruptcy, the cost of debt capital is alwayshigher than the cost of equity capital ... calculate the weighted average cost of capital is based on an average of the cost of debt already issued by the firmand the cost of new debt c One problem with the CAPM approach in estimating the cost ... Trang 7Cost of capital estimation Answer: c Diff: Ma The cost of capital used to evaluate a project should be the cost ofthe specific type of financing used to fund that project b The cost of debt

Ngày tải lên: 16/03/2017, 10:36

... 10.47% d If the company wishes to expand its present business then the WACC is a reasonable estimate of the discount rate since the risk of the proposed project is similar to the risk of the existing ... implicitly treats the discount rate for the project as the cost of debt if the project is debt financed, and as the cost of equity if the project is equity financed In fact, if the project poses ... IRR on the computer project is less than the WACC of firms in the computer industry Therefore, the project should be rejected However, the WACC of the firm (based on its existing mix of projects)

Ngày tải lên: 24/02/2018, 08:34

... DETERMINING THE COST OF CAPITAL (Difficulty: E = Easy, M = Medium, and T = Tough) True-False Easy: (10.1) Cost of capital Answer: a Diff: E The cost of capital should reflect the average cost of the ... a The cost of capital used to evaluate a project should be the cost of the specific type of financing used to fund that project b The cost of debt used to calculate the weighted average cost of ... WACC represents the cost of capital based on historical averages In that sense, it does not represent the marginal cost of capital e The cost of retained earnings exceeds the cost of issuing new

Ngày tải lên: 04/06/2018, 15:27

... the cash flows of a project, but not when calculating the cost of capital. Trang 5 Only cost of debt is affected Trang 6  6Historical (Embedded) Costs  vs. New (Marginal) Costs  The cost of capital is used primarily to make decisions which involve raising and investing new capital.  So, we  ... risks.  The division’s WACC should be adjusted to reflect the division’s risk and capital structure Trang 30  30The Risk­Adjusted Divisional  Cost of Capital  Estimate the cost of capital that the  ... Issuing new common stock may send a negative signal to the capital markets, which may depress stock price Trang 36  36Comments about flotation  costs:  Flotation costs depend on the risk of the firm  and the type of capital being raised.  The flotation costs are highest for common 

Ngày tải lên: 16/01/2020, 19:49

... analysis of the impact of existing and proposed regulation on cost of equity capital The analysis sheds lights on the extent to which the cost of equity of banks and the pricing of risk in the Eurozone ... Estimating the Cost of Equity Capital of the Banking Sector in the Eurozone Maher Asal 1 Abstract The objectives of this paper are, first, to estimate the long-run cost of equity capital for the ... that the increase of the cost of capital will be completely echoed on the cost of credit They make their study on a sample of large U.S banks over the period 1976-2008 in order to quantify the

Ngày tải lên: 01/02/2020, 21:53

... review of the empirical studies conducted in the last 22 years on the link between intellectual capital disclosure and the cost of capital (cost of equity and cost of debt) The findings of empirical ... of the cost of capital Second, it attempts to revive the discussion on the relevance of IC reporting by the entities in terms of minimalizing their cost of capital Keywords: intellectual capital ... in the reduction of the cost of capital Second, it attempts to revive and foster the discussion of the relevance of IC data reporting by the entities especially in the context of external capital

Ngày tải lên: 27/09/2020, 15:11

... Estimating the Cost of Capital McKinsey & Company Tim Koller, Marc Goedhart, David Wessels NHÓM THỰC HIỆN HUỲNH THÙY ... Ước lượng phần bù rủi ro thị trường Phương pháp dựa vào phần bù rủi ro lịch sử để dự báo, thực theo bước sau: • Sử dụng trái phiếu phủ dài hạn: tính tốn phần bù rủi ro thị trường thường sử dụng ... (annualized premiums) cho SMB (3,0%) HML (4,4%), chi phí vốn Home Depot 9,8 %, đối lập với 10,4 % theo CAPM 26 Lý thuyết chênh lệch giá (APT) •   27 Ước tính chi phí nợ sau thuế • Để ước tính chi

Ngày tải lên: 18/04/2021, 08:31

... capital is riskier than equity capital, the cost of debt isalways greater than the WACC b Because of the risk of bankruptcy, the cost of debt capital is alwayshigher than the cost of equity capital ... calculate the weighted average cost of capital is based on an average of the cost of debt already issued by the firmand the cost of new debt c One problem with the CAPM approach in estimating the cost ... Trang 7Cost of capital estimation Answer: c Diff: Ma The cost of capital used to evaluate a project should be the cost ofthe specific type of financing used to fund that project b The cost of debt

Ngày tải lên: 22/11/2016, 11:02

... power. 12 And for the most part, the initiators of totalitarian rule pursued their aims in the name of some grand moral imperative – the Aryan domination of the sub-human races of the world or the Wnal establishment ... see in the case of Mandela). On the other hand, the separation between personal and institutional moral capital can work the other way. There are occasions (as we shall see in our study of Lincoln) ... themselves, at the very least in the eyes of their supporters, as legitimate interests, arguing not just the contingent existence of their desires but the rightness and justness of their claims...

Ngày tải lên: 21/09/2012, 11:00

... Management, Journal of Business Research, Organization Science, Journal of Business and Industrial Marketing, Journal of Business-to-Business Marketing, and Journal of Marketing Channels, and others. ... suppliers and the price at which they sell the product to their customers. The majority of the famous department stores in the United States and European countries purchase all kinds of products ... the labor costs of the sales staff, and various types of promotion costs. In addition to sales commissions, the discount store requests brand suppliers to pay logistics costs and to share the...

Ngày tải lên: 17/04/2013, 20:23

... survey of the early wave of the literature): on the basis of a set of financial ratios, reflecting the different dimensions of a CAMEL rating system, 4 the statistically best subset of variables ... among others, be of a public choice nature and include the importance of the particular financial institution to the local economy and its potential systemic impact on the rest of the financial ... investigate the role of these connections in causing and resolving financial institutions’ distress. Furthermore, the general causes of the East Asian financial crisis have been the subject of intense...

Ngày tải lên: 18/10/2013, 08:15