Cost Evaluation of Equity Financing and Bond Financing - The Core of Corporate Finance: The Core of Corporate Finance

Author: John Poindexter
Publisher:
Publish Date: 2003-07-01
Features: The cost of capital is the core of corporate finance. A company's operations must compensate for its cost of capital to achieve greater success. Therefore, cost of capital assessment is crucial, determining the future growth rate and scale of the company. Equity financing and debt financing are the basic financing methods. This book starts from these two aspects, discussing the issues of cost assessment in detail and systematically. The book first discusses the impact of a series of factors on financing costs under equity financing methods, such as the price-to-earnings ratio, different dividend methods, profit index, stock market risk and risk premium rate, asset pricing model, company size, and the market-to-book value ratio. The book also focuses on the cost assessment in debt financing, analyzing the impact of external factors such as financial leverage, cost comparison of alternative projects, tax planning, inflation, currency risk, and interest rates, as well as internal factors such as asset collateral and operating leverage, on financing costs.