TAILIEUCHUNG - Ebook Financial management for decision makers (7th edition): Part 2

(BQ) Part 2 book "Financial management for decision makers" has contents: The cost of capital and the capital structure decision, making distributions to shareholders, managing working capital, measuring and managing for shareholder value, business mergers and share valuation. | Chapter 8 THE COST OF CAPITAL AND THE CAPITAL STRUCTURE DECISION INTRODUCTION We saw in Chapter 4 that the cost of capital has a vital role to play when using the NPV and IRR methods of investment appraisal. In this chapter, we examine how the cost of capital may be calculated. We first consider how to calculate the cost of each element of long-term capital and then how these costs can be combined so as to derive an overall cost of capital. We shall also take a look at the factors to be taken into account when making capital structure decisions: in particular, the impact of gearing on the risks and returns to ordinary shareholders. We touched upon this area in Chapter 3 but now consider it in more detail. We end the chapter by considering whether there is an optimal capital structure for a business. This is an important topic, which has been the subject of much debate. Learning outcomes When you have completed this chapter, you should be able to: ■ ■ Calculate the degree of financial gearing for a business and explain its significance. ■ Evaluate different capital structure options available to a business. ■ 315 Calculate the weighted average cost of capital for a business and assess its usefulness when making investment decisions. Discuss the key points in the debate over whether a business has an optimal capital structure. 6/5/14 3:53 PM COST OF CAPITAL We saw in Chapter 4 that the cost of capital is used as the discount rate in NPV calculations and as the ‘hurdle rate’ when assessing IRR calculations. As investment projects are usually financed from long-term capital, the discount rate (or hurdle rate) applied to new projects should reflect the required returns from investors in long-term capital. From the business’s viewpoint, these returns represent its cost of capital. It represents an opportunity cost as it will reflect the returns that investors require from investments .

• Tài chính doanh nghiệp
• Financial management
• Decision makers
• The capital structure decision
• Making distributions
• Managing working capital
• Business mergers
• Financial statement
• International trade transactions
• Fundamentals of financial management
• Financial statement analysis
• International financial management
• Quản lý tài chính
• Multinational financial management
• Exchange rates
• Financial environments
• Overview of Financial Management and the Financial Environment
• The financial environment
• Forms of business organization
• Determinants of stock pricing
• Financial instruments
• Practical financial management
• Financial background
• Financial statements
• Financial planning
• Financial system
• Financial ratio
• IT financial management
• Setting the scene
• IT financial management maturity
• Parameters influencing IT financial management
• Costs of IT financial management
• More quantifiable benefits
• Overview of roles
• Hospitality financial management
• Hospitality industry management
• Analysis of financial reports
• Analyzing financial statements
• Management decision making
• Foundations of financial management
• Review of accounting
• Financial analysis
• Financial forecasting
• The financing decision
• Financial leverage
• Current asset management
• Paper F7
• Revision kit 2016
• Management Financial
• Financial Management Exam Review
• Review of Financial Management
• Study text 2016
• Lecture Multinational financial management
• International financial reporting standards
• Foreign exchange risk management
• Financing decisions
• Investment decisions
• Role of management
• International cash management
• Cash flow analysis
• Centralized cash management
• Intermediate financial management
• Financial options
• Corporate valuation
• Corporate governance
• Financial markets
• Cash flow
• Analysis of financial statements
• Ratio analysis
• Interest rates
• Financial institutions
• Forecasting sales
• Business environment
• Limited liability company
• Common size analysis
• Statement analysis
• Break even analysis
• Break even point