chap 14

1.Understand the concepts underlying the firms overall cost of capital and the purpose for its calculation.

2.Evaluate a firms capital structure, and determine the relative importance (weight) of each source of financing.

3.Calculate the after-tax cost of debt, preferred stock, and common equity.

4.Calculate a firms weighted average cost of capital , Discuss the pros and cons of using multiple, risk-adjusted discount rates. Describe the divisional cost of capital as a viable alternative for firms with multiple divisions and Adjust NPV for the costs of issuing new securities when analyzing new investment opportunities.