Loading lesson

Cost of capital and capital structure

Corporate issuers / corporate finance · Lesson 3 of 4

Lesson 3 of 4

Ask a tutor

Lesson 3 of 4 · Corporate issuers / corporate finance

Cost of capital and capital structure

3 quick checks≈2% of the testStretch

Reading is free. Sign in to tick off lessons, keep your place and track your mastery.

By the end you’ll be able to

Calculate and interpret the cost of debt, preferred stock, and common equity using appropriate market-based approaches.
Calculate and interpret the weighted average cost of capital for a company using target or market-value weights.
Explain the marginal cost of capital schedule and its role in evaluating investment opportunities.

0% read

Explain the basic theories and trade-offs of capital structure choice, including the effects of taxes, financial distress costs, agency costs, and asymmetric information.

Evaluate how changes in capital structure affect company value, cost of capital, and measures of leverage, and describe practical factors that influence financing decisions.

This lesson hasn’t been written yet

CFA Level I lessons are written from the official syllabus the first time a learner opens them, then saved for everyone. Sign in and this one is written for you in a minute or two. It’s free.

Sign in Create a free account