Contents: The Cost of Capital – Overview, The Cost of Equity, The Cost of Debt, The Cost of Preferred Stock, The Weighted Average Cost of Capital (WACC), Divisional and Project Costs of Capital, Floatation Costs relative to WACC. | Cost of Capital Chapter 14 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Notes to the Instructor: The PowerPoints are designed for an introductory finance class for undergraduates with the emphasis on the key points of each chapter Each chapter’s PowerPoint is designed for active learning by the students in your classroom Not everything in the book’s chapter is necessarily duplicated on the PowerPoint slides There are two finance calculators used (when relevant). You can delete the slides if you don’t use both TI and HP business calculators Animation is used extensively. You can speed up, slow down or eliminate the animation at your discretion. To do so just open a chapter PowerPoint and go to any slide you want to modify; click on “Animations” on the top of your PowerPoint screen tools; then click on “Custom Animations”. A set of options will appear on the right of your screen. You can “change” or “remove” any line of that particular slide | Cost of Capital Chapter 14 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Notes to the Instructor: The PowerPoints are designed for an introductory finance class for undergraduates with the emphasis on the key points of each chapter Each chapter’s PowerPoint is designed for active learning by the students in your classroom Not everything in the book’s chapter is necessarily duplicated on the PowerPoint slides There are two finance calculators used (when relevant). You can delete the slides if you don’t use both TI and HP business calculators Animation is used extensively. You can speed up, slow down or eliminate the animation at your discretion. To do so just open a chapter PowerPoint and go to any slide you want to modify; click on “Animations” on the top of your PowerPoint screen tools; then click on “Custom Animations”. A set of options will appear on the right of your screen. You can “change” or “remove” any line of that particular slide using the icon on the top of the page. The speed is one of the three options on every animation under “timing”. Effort has been made to maintain the basic “7x7” rule of good PowerPoint presentations. Additional problems and/or examples are available on McGraw-Hill’s Connect. 1 Chapter Outline The Cost of Capital – Overview The Cost of Equity The Cost of Debt The Cost of Preferred Stock The Weighted Average Cost of Capital (WACC) Divisional and Project Costs of Capital Floatation Costs relative to WACC Chapter Outline The Cost of Capital – Overview The Cost of Equity The Cost of Debt The Cost of Preferred Stock The Weighted Average Cost of Capital (WACC) Divisional and Project Costs of Capital Floatation Costs relative to WACC Why the Cost of Capital Is Important We know that the return earned on assets depends on the risk of those assets The return to an investor is the same as the cost to the company Lecture Tip: Students often find it easier to grasp the intricacies of cost of .
