Page 344 - Microsoft Word - 00 ACCA F9 IWB prelims 2017.docx

Chapter 18

 interpret a graph demonstrating the views of M&M on capital structure with
corporate taxes

 identify a range of capital market imperfections and describe their impact on the
views of M&M on capital structure

 explain the relevance of pecking order theory to the selection of sources of
finance

 discuss the circumstances under which weighted average cost of capital
(WACC) can be used in investment appraisal

 identify in a scenario question whether WACC is appropriate for use by a
company

 discuss the advantages of the capital asset pricing model (CAPM) over WACC
in determining a project-specific cost of capital

 identify in a scenario where CAPM may be suitable to determine a project-
specific cost of equity capital

 apply CAPM in calculating a project-specific discount rate

and answer questions relating to these areas.

The underpinning detail for this Chapter in your Integrated Workbook can
be found in Chapter 18 of your Study Text

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