Discussion Post: Cost & Sources of Capital
A firm grasp of the cost and sources of capital is fundamental to business success. Not understanding the sources of capital will severely limit the ability to grow, while not being aware of the true cost can lead to investing in projects that are not profitable.
Review Chapter 11 in Foundations of Financial Management. As you read this chapter, pay close attention to the various sources of capital and the associated costs.
Navigate to the threaded discussion and respond to the following:
• Why do firms calculate their weighted average cost of capital?
• In computing the cost of capital, which sources should be considered?
• How does a firm's tax rate affect its cost of capital? What is the effect of the flotation costs associated with a new security issue on a firm's weighted average cost of capital?
The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.