Page 21 - F2 Integrated Workbook STUDENT 2019

Chapter 2

Cost of capital

Outcome

At the end of this session you should be able to:

 calculate the cost of equity for an incorporated entity using the dividend
valuation model with and without growth in dividends

 calculate the post-tax cost of debt for an incorporated entity including post-tax
cost of bank borrowings, post-tax cost of bond and post-tax cost of convertible
bonds up to and including conversion

 calculate the weighted average cost of capital (WACC) for an incorporated
entity and understand its use and limitations

 calculate the yield to maturity on bonds

and answer questions relating to these areas.

The underpinning detail for this chapter in your Integrated Workbook can be
found in Chapter 2 of your Study Text.

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