Ch. 10 · Lesson 1 of 12
Component Costs of Capital
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Ch. 10 · Lesson 1 of 12 · 15 min
Component Costs of Capital
Find what each source of money costs the firm: after-tax debt, preferred stock, retained earnings (three ways), and new common stock.
Inside this lesson
- Why this matters
- The core idea
- The formula
- Worked example 1: the cost of equity three ways, then new stock
- Worked example 2: debt and preferred from market prices
- Your turn
- Calculator steps
- Common mistakes
- Quick check
- Key takeaways
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