Cost of Capital
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each of the black spaces below before clicking
on it to display the answer.
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WACC | WACC = (wd)[kd(1 – t)] + (wps)(kps) + (wce)(kce)
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Marginal Cost of Capital (MCC) | MCC is the WACC of the next dollar of capital raised. marginal cost of capital curve slopes upward
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Cost of Debt | kd (1 – marginal tax rate)
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Cost of Preferred Stock | k = preferred dividend / market price of preferred
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Cost of Common Equity (CAPM) | kce = RFR + [E(Rmkt) – RFR]
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Cost of Common Equity (Div Discount) | k = D1/P0 + g
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Cost of Common Equity (Bond yield plus risk premium) | kce = bond market yield + risk premium
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Asset (unlevered) beta | Beta asset = Beta pure play [ 1/ 1+( (1-t) D/E) ]
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Company (Project) beta | Beta project = Beta asset [ 1+( (1-t) D/E) ]
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Cost of Common Equity with CRP | k = Rf + Beta [ E(Rmrt) – Rf + CRP]
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Country Risk Premium | CRP = sovereign yield spread * [ annualized sigma of equity index / annualized sigma of sovereign bond market in terms of developed market currency]
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Breakpoints | [Amount of capital at which the component's cost of capital changes] / [Weight of the component in the the capital structure]
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Created by:
thongkk
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