Cost of Capital: What it is and How to Use it

Overview

Every business needs capital, and capital has a cost. Providers of debt and equity demand a return and the combination is the cost of capital for the business. This session discusses how to calculate the cost of capital, how to use it to make superior business decisions every day and some common ways organizations misuse this number.

Who should understand your organization’s cost of capital? Even if you are not yet the CFO, you need to thoroughly understand the cost of capital and its use. The cost of capital allows managers to, “Get the biggest bang for the buck.” If you want to enhance your corporate finance skills, this session is for you.

Prerequisites

Some financial management experience is helpful

Objectives

• Understand the calculation and use of the weighted average cost of capital

Highlights

• Find your organization’s cost of debt
• Calculate the cost of equity
• Understanding your Weighted
• Average Cost of Capital (WACC)
• Interpret your cost of capital
• Properly use the cost of capital to make decisions
• Avoid common cost of capital mistakes