Cost of Capital and its Components: An Application

Halil D. Kaya

International Journal of Academic Research in Business and Social Sciences, 2016, vol. 6, issue 5, 246-257

Abstract: This case deals with the estimation of cost of capital and its components. Students will learn how to estimate the cost of debt, the cost of preferred stock, and the cost of common stock. They will learn how to compute the weight of each cost of capital component and then they will estimate the overall cost of capital. Finally, they will discuss why certain types of capital are more expensive than others. This is a hands-on experience for students who want to learn more about corporate financing costs.

Keywords: Capital Structure; Cost Of Capital; Cost Of Debt; Cost Of Preferred Stock; Cost Of Common Stock; Project Valuation (search for similar items in EconPapers)
JEL-codes: G30 G31 G32 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijarbs:v:6:y:2016:i:5:p:246-257

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