COST OF CAPITAL (A FINANCIAL TOOL TO CREATE AND MAXIMIZE SHAREHOLDER VALUE)

Download or read book COST OF CAPITAL (A FINANCIAL TOOL TO CREATE AND MAXIMIZE SHAREHOLDER VALUE) written by EMMANUEL ATTAH KUMAH and published by Lulu.com. This book was released on 2013-07-27 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: The cost of capital is important in the financial management of every business. A measure of the cost of capital is required when evaluating various aspects of strategic business plans, e.g., selecting a financial leverage position, calculating the profitability of alternative investment opportunities, measuring economic value-added and comparing various merger and acquisition plans. The task of determining the appropriate cost of capital to use requires a careful analysis of the effect of alternative financing choices which are open to every business. This report considers the cost of capital of Royal Roots Company. Ways are examined to determine the cost of capital by Royal Roots Company. This book sequentially identifies: principles of cost of capital, the capital structure, the cost of debt, cost of equity, cost of preference shares and overall cost of capital (weighted average cost of capital).The cost of equity capital and debt determines the overall cost of capital of any company (public or private)