Cost of Capital

It is important for a company to know the cost of the various types of funds in its capital structure in order to satisfy the terms of the capital providers. If these investors are not satisfied with their returns, they may remove their money from the firm. The required rate of return to investors is how much the company has to pay to obtain its finance. It is important for companies to know their cost of capital to ensure that projects they invest in achieve a level of return required to satisfy those who provide finance for the projects.

Learning contents:

  • Sources of capital
  • Expectations and terms of capital providers
  • Review of the statement of financial position and income statement
  • Calculating the cost of equity using Gordon’s’ Dividend Growth Model
  • Assumptions of the model
  • Calculating the cost of preference shares
  • Calculating the cost of irredeemable debt
  • Calculating the cost of redeemable debt
  • Reasons why cost of debt is cheaper than cost of capital
  • Calculating the Weighted Average Cost of Capital
  • Comparing the cost of capital to the return on capital employed

For whom:  Chief financial officers, Accountants, Heads of departments

 

Fee:              Seventy thousand naira only

Duration:     One day