Learning Outcomes

Upon successful completion of this course, you should be able to:

• Identify the components of the weighted average cost of capital
• Compute the cost of debt and preference capital
• Describe the methods of adjusting for floatation costs
• Indicate some misconceptions in calculating and applying the cost of capital
• Recognize the criticisms of the Modigliani-Miller theory
• Evaluate the impact of corporate and personal taxes on capital structure
• Outline the costs of financial distress in an organization
• Describe the pecking order of financing
• Explain the signaling theory of capital structure
• Analyze the determinants of a firm's dividend policy