Identify and recommend at least 1 credible Web site that discusses the process of calculating the cost of capital and it components, and address at least 3 of the following topics:
- What is the cost of capital, and what role does it play in long-term investment decisions?
- What are the 3 basic components of the formula, and how is each estimated?
- Why is the after-tax cost of debt used, and how does this adjustment affect the overall cost of capital?
- Which component is generally the most expensive, and why?
- How is the cost of capital calculated, and how are the weights of each component determined?
- Why is the cost of retained earnings less costly than issuing new equity?
- What is the difference between the weighted average cost of capital (WACC) and the weighted marginal cost of capital (WMCC), and when should the WMCC be used?