Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Concept explainers

Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the l…
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
Question

. How are the component costs combined to form
a weighted average cost of capital (WACC),
and why is it necessary to use the WACC in capital
budgeting?

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WACC:
VIEW
The ways of components cost combined to form WACC is as follows:
VIEW
The formula to calculate WACC is as follows:
VIEW
The uses of WACC in capital budgeting is as follows:
VIEW
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