Trong triển lãm, có một tỷ lệ lớn các cổ phiếu phổ thông cao, chi phí nợ và cổ phiếu ưu đãi, trong đó cung cấp cho công ty tối thiểu nguy cơ không đáp ứng các khoản thanh toán lãi suất cố định. Nếu quản lý của một công ty có xu hướng giảm chi phí vốn, | 27-2 The Cost of Capital 361 Exhibit 27-1 Weighted Average Cost of Capital Funding Source Total Funding X Percentage Cost of Funding Dollar Cost of Funding Debt 950 000 X 49 600 Preferred stock 500 000 X 60 000 Common stock 2 500 000 X 324 075 Totals 3 950 000 X 433 675 In the exhibit there is a large proportion of high-cost common stock to debt and preferred stock which gives the company a minimal risk of not meeting its fixed interest payments. If a company s management were inclined to reduce the cost of capital it could do so by obtaining more debt and using it to buy back common stock. This would certainly eliminate some high-cost common stock but at the price of increasing the size of interest payments which in turn would increase the amount of fixed costs and therefore raise the breakeven point for the company which can be risky if it is already operating at close to the breakeven level. Thus there is an increased risk of business failure for those companies that attempt to reduce their cost of capital by transferring their sources of funding from equity to debt. Though we have just reviewed the calculations for determining a company s existing cost of capital this does not necessarily mean that it is the cost that should be applied to the valuation of all prospective capital projects. There are two issues that may require one to use a different cost of capital. The first is that the company may have to alter its capital structure in order to obtain any additional funding. For example lenders may have informed the company that no more debt will be available unless more equity is added to its capital base. In this instance the cost of capital to be applied to a new capital purchase should be the incremental cost of funds that will specifically apply to the next investment. The second issue is that the cost of capital just calculated was for the existing blend of debt and equity whose costs may very well have changed on the open .
