Corporate Cost of Capital and Capital Structure Training Course

1. Introduction to the cost of capital

1. Definition and importance of cost of capital
2. Role of cost of capital in financial decision-making
3. Overview of capital components

2. Sources of debt capital

1. Types of debt instruments
2. Cost implications of various debt sources
3. Impact of market conditions on debt capital

3. Calculating the cost of capital

1. Basic formulas and calculation methods
2. Adjustments for risk and tax considerations

4. Approaches to the cost of equity

1. Dividend discount model (DDM)
2. Capital asset pricing model (CAPM)
3. Comparisons and usage contexts

5. WACC and capital structure

1. Understanding the weighted average cost of capital (WACC)
2. Influence of capital structure on WACC
3. Strategic implications for business financing

6. Divisional cost of capital and flotation costs

1. Calculating the divisional cost of capital
2. Incorporating flotation costs in capital costing
3. Allocation of costs across divisions

7. Misconceptions and assumptions

1. Common misconceptions about the cost of capital
2. Critical assumptions in cost of capital calculations
3. Addressing and correcting misconceptions

1. Approaches to capital structure

1. Trade-off theory
2. Pecking order theory
3. Agency costs and capital structure

2. The Modigliani-Miller theory

1. Proposition I without taxes
2. Proposition II without taxes
3. Critiques and practical applications

3. The Modigliani-Miller theory - 2

1. Incorporating tax: Proposition I with taxes
2. Proposition II with taxes
3. Implications for corporate financing strategy

4. Tax effect on capital structure

1. Tax shield and its benefits
2. Impact of corporate income tax on financing decisions
3. Comparative analysis of debt vs. equity from a tax perspective

5. Optimal capital structure and dividend policy

1. Determining the optimal capital structure
2. Interaction between dividend policy and capital structure