The document discusses the cost of capital, which is the rate of return a firm requires to increase its market value. It has three components: return at zero risk, business risk premium, and financial risk premium. Cost of capital is classified as historical vs future, specific vs composite, average vs marginal, and explicit vs implicit. Specific costs include cost of debt, preference shares, equity shares, and retained earnings. Composite cost is the weighted average cost of different sources. Cost of capital is computed using book value weights or market value weights to determine the weighted average cost of capital (WACC).
Investment Decision — Capital Budgeting Techniques — Pay Back Method — Accounting Rate Of Return — NPV — IRR — Discounted Pay Back Method — Capital Rationing — Risk Adjusted Techniques Of Capital Budgeting. — Capital Budgeting Practices
This PPT contains the full detail of topic leverage in financial management
it covers following topics :-
Meaning of Leverage
Types of Leverage
Operating Leverage
Financial Leverage
Difference between Operating & Financial Leverage
Combined Leverage
Illustrations
Exercise
Investment Decision — Capital Budgeting Techniques — Pay Back Method — Accounting Rate Of Return — NPV — IRR — Discounted Pay Back Method — Capital Rationing — Risk Adjusted Techniques Of Capital Budgeting. — Capital Budgeting Practices
This PPT contains the full detail of topic leverage in financial management
it covers following topics :-
Meaning of Leverage
Types of Leverage
Operating Leverage
Financial Leverage
Difference between Operating & Financial Leverage
Combined Leverage
Illustrations
Exercise
This analysis is an important tool used to optimize the capital structure for highest earnings for shareholders
It helps in understanding the sensitivity of EPS at given level of Earning before Interest & Tax under different sources of financing
It helps in analyzing how capital structure decision is important to raise the value of firm
An optimal financing structure minimizes the cost of capital and maximizes the earnings
Earning Per Share under different Capital structure plans
Plan 1 ( Only Equity Shares )
EPS = (EBIT (1−Tax rate))/(No. of Outstanding Shares)
Plan 2 ( Equity Shares & Debt )
EPS = ((EBIT −Interest) (1−Tax rate))/(No. of Outstanding Shares)
Plan 3 (Equity, Debt & Preference Shares)
EPS = ((EBIT −Interest) (1−Tax rate)−Pref. Dividend)/(No. of Outstanding Shares)
Plan 4 (Equity shares & Preference Shares)
EPS = (EBIT (1−Tax rate)−Pref. Dividend)/(No. of Outstanding Shares)
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Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Since the 1960s, investors have known how to quantify and measure risk with the variability of returns, but no single measure actually looked at both risk and return together. Today, we have three sets of performance measurement tools to assist us with our portfolio evaluations. The Treynor, Sharpe and Jensen ratios combine risk and return performance into a single value, but each is slightly different. Which one is best for you? Why should you care? Let's find out.
Portfolio performance measures should be a key aspect of the investment decision process. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested). Remember, portfolio returns are only part of the story. Without evaluating risk-adjusted returns, an investor cannot possibly see the whole investment picture, which may inadvertently lead to clouded investment decisions.
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
This presentation is made by Toran Lal Verma. Meaning, nature, and scope of Financial Management are discussed. scope and objectives of financial management have been discussed along with merits and demerits.
This analysis is an important tool used to optimize the capital structure for highest earnings for shareholders
It helps in understanding the sensitivity of EPS at given level of Earning before Interest & Tax under different sources of financing
It helps in analyzing how capital structure decision is important to raise the value of firm
An optimal financing structure minimizes the cost of capital and maximizes the earnings
Earning Per Share under different Capital structure plans
Plan 1 ( Only Equity Shares )
EPS = (EBIT (1−Tax rate))/(No. of Outstanding Shares)
Plan 2 ( Equity Shares & Debt )
EPS = ((EBIT −Interest) (1−Tax rate))/(No. of Outstanding Shares)
Plan 3 (Equity, Debt & Preference Shares)
EPS = ((EBIT −Interest) (1−Tax rate)−Pref. Dividend)/(No. of Outstanding Shares)
Plan 4 (Equity shares & Preference Shares)
EPS = (EBIT (1−Tax rate)−Pref. Dividend)/(No. of Outstanding Shares)
Thank You For Waching
Subscribe to DevTech Finance
Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Since the 1960s, investors have known how to quantify and measure risk with the variability of returns, but no single measure actually looked at both risk and return together. Today, we have three sets of performance measurement tools to assist us with our portfolio evaluations. The Treynor, Sharpe and Jensen ratios combine risk and return performance into a single value, but each is slightly different. Which one is best for you? Why should you care? Let's find out.
Portfolio performance measures should be a key aspect of the investment decision process. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested). Remember, portfolio returns are only part of the story. Without evaluating risk-adjusted returns, an investor cannot possibly see the whole investment picture, which may inadvertently lead to clouded investment decisions.
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
This presentation is made by Toran Lal Verma. Meaning, nature, and scope of Financial Management are discussed. scope and objectives of financial management have been discussed along with merits and demerits.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
2. COST OF CAPITAL
Cost of capital is the rate return the firm requires
from investment in order to increase the value of the
firm in the market place.
Hampton
The sources of capital of a firm must be in the form of
preference shares, equity shares, debt and retained earnings.
In simple cost of capital of a firm is the weighted average
cost of their different sources of financing.
3. Components Of Cost Of Capital
A firm’s cost of capital include 3 components :
1) Return at zero risk level :- It relates to the expected
rate of return when a project involves no financial
or business risk.
2) Business risk premium :- Generally business risk
premium is determined by the capital budgeting
decisions for investment proposals. If the firm
selects a project which has more than the normal
risk, the suppliers of the funds for the project will
naturally expect a higher rate of return than the
normal rate. Thus the cost of capital increases.
4. 3) Financial risk premium :- Financial risk relates to
the pattern of capital structure of the firm. A firm
which has higher debt content in its capital
structure should have more risk than a firm which
has comparatively low debt content.
5. The above 3 components of cost of capital may be
written in the form of the following equation.
K=r0+ b + f
Where,
K= cost of capital
r0 = return at 0 risk level
b= business risk premium
f= financial risk premium
6. Classification Of Cost Of Capital
1) Historical cost and Future cost
2) Specific cost and Composite cost
3) Average cost and Marginal cost
4) Explicit cost and Implicit cost
Historical cost and Future cost :-
Historical cost are the costs which are incurred for
the procurement of funds based upon the existing
capital structure of the firm. It is a book cost.
7. Future cost is the cost which is relate to
estimated for the future. Simply it is the cost to be
incurred for raising new funds.
Specific cost and composite cost:-
Specific cost refers to the cost which is
associated with the particular sources of capital.
E.g.- Cost of Equity
Composite cost is the combined
cost of different sources of capital taken together.
E.g.- Cost of debt, cost of equity & Cost of
pref.shares.
8. Average cost and Marginal cost:-
Average cost is the combined cost of various
sources of capital such as equity shares, debentures,
preference shares.
Marginal cost of capital is the average
cost of capital which has to be incurred due to new funds
raised by the company for their financial requirements.
Explicit cost and Implicit cost:-
Explicit cost is the cut-off rate or internal rate of
return.
Implicit cost is the rate of return
related to the best investment opportunity of the firm and its
shareholders that will be foregone in order to take up a
particular project.
9. Computation Of Cost Of Capital
Computation of the Cost of Capital involves;
I. Computation of specific costs.
II. Computation of composite cost.
10. Computation of Specific Cost includes;
A. Cost of Debt
B. Cost of Preference Shares
C. Cost of Equity Shares
D. Cost of Retained Earnings
11. Computation of Specific Cost
A. Cost of Debt :-It is the rate of return which is
expected by lenders.
Cost of Debt(K d) =
𝐼
𝑁𝑃
Where,
K d = Cost of Debt
I = Interest
NP = Net proceeds
12. A1) When debt is issued at par:
NP = Face value-Issued expenses
A2) When debt issued at premium:
NP = Face value + Premium – Issue expenses
A3) When debt issued at discount:
NP = Face value – Discount – Issue expenses
13. Cost of redeemable debt(before tax)
Redeemable debt refers to the debt which is to be
redeemed or repayable after the expiry of a fixed period
of time.
K d(before tax) =
I+(𝑃−𝑁𝑃)/n
(𝑃+𝑁𝑃)/2
Where,
I = Annual Interest Payment
P = Par Value Of Debentures
NP = Net Proceeds Of Debentures
n= No. Of Years To Maturity
14. Cost of redeemable debt(after tax)
K d(after tax) = K d (before tax) × (1-T)
Cost of Existing Debt
Cost of Existing debt(Before tax) =
Annual cost before tax
Average value of debt
15. Average value of Debt
AV =
𝐍𝐏+𝐑𝐕
𝟐
Where,
AV = Average Value
NP = Net Proceeds
RV = Redemption Value
16. B. Cost of Preference Share Capital
Normally a fixed rate of dividend is payable
on preference shares. But in the practical sense
preference dividend is regularly paid by the companies
when they earn sufficient amount of profit.
B.1) Cost of irredeemable preference share capital
KP=DP/NP
Where,
KP=Cost of pref.share capital
DP=Fixed preference dividend
NP=Net proceeds of pref . shares
17. Problem
A company raises preference share capital of
Rs.1,00,000 by issuing 10% preference shares of
Rs.100 each. Compute the cost of preference capital
when they are issued at
a) 10% premium.
b) At 10% discount.
18. Solution:
a)When preference shares are issued at a premium of
10%.
KP=DP/NP
Where,
DP=Rs.10,000(@10% on Rs.1,00,000)
NP=Rs.1,10,000(Rs.1,00,000+Rs.10,000)
i.e., =
10,000
1,10,000
= 9.09%
19. b)When preference shares are issued at a discount of
10%
KP=DPNP
=
10,000
90,000(1,00,000−10,000)
= 11.11%
20. B2)Cost of redeemable preference shares
Redeemable preference shares are
those which are to be redeemed after the expiry of
specified period of time.
KP=
𝐶+(𝐷−𝑁𝑃)/𝑛
(𝐷+𝑁𝑃)/2
C= annual dividend
D= par value of preference shares
n= no . of years to maturity
NP=net proceeds
21. Problem:
A company issues 10% redeemable preference shares
for Rs.1,00,000 redeemable at the end of the 10th year
from the year of their issue. The underwriting cost is
5%. Calculate the effective cost of preference share
capital.
23. C. Cost of Equity Capital
Cost of equity capital may be defined as
the minimum rate of return that a firm must earn on it
investment, and also the market price of the equity
shares on unchanged.
C1)Dividend price method
Ke=D/NP
Where,
Ke=Cost of equity capital
D=Expected dividend per share
NP=Net proceeds per share
24. C2)Dividend price plus growth
In this method cost of equity capital is
calculated on the basis of the dividend yield and the
growth rate in dividend.
Ke=D/NP + g
Where,
Ke=Cost of equity capital
D=Expected dividend per share
NP=Net proceeds per share
g=Growth rate in dividends
26. D. Cost of Retained Earnings
It refers to that portion of the profit retained by the
company for future development, business use and
expansion is known as retained earnings.
Kr=Ke(1-t) (1-b)
Where,
Kr=Cost of retained earnings
Ke=Cost of equity capital
t=Tax rate
b=Brokerage
27. Computation of Composite Cost
Weighted Average Cost of Capital(WACC)
It refers to the weighted average cost of
different sources of finance. It is very important in
financial decision making. Steps involved in
computation of WACC;
• Calculate the cost of each of the sources of finance
is ascertained.
• Assigning weights to specific costs.
• Multiplying the cost of each sources by the
appropriate weights.
• Dividing the total weighted cost by the total
weights.
28. Weighted average cost of capital can be
computed the following formula.
Kw=ΣXW/ΣW
Where,
Kw=Weighted average cost of capital
X=Cost of specific source of finance
W=Weights, proportion of specific source of
finance
29. Problem
The cost of capital (after tax) of a company is the
specific sources is as follows:
Cost of Debt 4.00%
Cost of Preference shares 11.50%
Cost of Equity Capital 15.50%
Cost of Retained Earnings 14.50%
(assuming external )
30. Cont………
Capital Structure are
Sources Amount
Debt 3,00,000
Preference Shares 4,00,000
Equity Share Capital 6,00,000
Retained Earnings 2,00,000
15,00,000
Calculate the weighted average cost of capital using
‘Book Value Weight’.
31. Solution:
Computation Of Weighted Average
Cost Of Capital Under Book Value Weights
Sources (a) Amount (b) Proportion(c) After tax
cost(d)
Weighted cost
(e) = (c) X (d)
Debt 300000 0.200(20%) 0.0400 0.0080
Preference
Share capital
400000 0.267(26.7%) 0.1150 0.0307
Equity Share
Capital
600000 0.400(40%) 0.1550 0.0620
Retained
Earnings
200000 0.133(13.3%) 0.1450 0.0193
1500000 1.000(100%) 0.1200
WEIGHTED AVERAGE COST OF CAPITAL : 12%
32. Alternative Approach
Computation Of Weighted Average Cost Of Capital
Sources (a) Amount (b) Cost (c) Total cost (d) = (b)
X (c)
Debt 300000 4.00% 12000
Preference Share
capital
400000 11.50% 46000
Equity Share Capital 600000 15.50% 93000
Retained Earnings 200000 14.50% 29000
1500000 180000
WEIGHTED AVERAGE COST OF CAPITAL = 180000/1500000 = 12%
33. From the information mentioned in the previous
eg.,compute WACC talking into a/c that the market value
of various sources of funds are as follows:
Sources Market Value
Debt 2,50,000
Preference Shares 4,50,000
Equity and Retained Earnings 10,00,000
34. A sum of Rs. 10,00,000 may be allocated between equity
share capital and retained earnings as follows.
Sources (a) Book value(b) Percentage(c) Market
Value(d)
Equity shares 6,00,000 600000
800000 X 100 =
75%
1000000 X 75%
= 750000
Retained Earnings 200000 200000
800000 X 100 =
25%
1000000 X 25%
= 250000
Thus after computing the market value, WACC is ascertained as follows.