Cost of Capital and Cost of Equity

Cost of Capital and Cost of Equity | Business Finance

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9 жыл бұрын

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This video explains two important concepts of business finance- cost of capital & cost of equity. First part of the video discusses on cost of capital drawing an example of a firm in terms of debt and equity. The cost of capital primarily depends upon the use of funds not the source. Next, the video briefly discusses on cost of equity referring the returns that investors holding shares in a firm require subsequent to an explanation on SML approach and dividend growth model.
Moving on the video also asks to calculate the cost of equity for an example of extremely prices shares. Step by step calculation has shown and ways to find out some important parameters are demonstrated visibly. Good understanding on cost of capital; cost of equity & there in between relationship as well as having knowledge on different methods of calculation is imperative to become an expert on today’s business finance and accountancy.

Пікірлер: 144

@hobbyhuman9499 2 жыл бұрын

Holy eff, my professor is impossible to understand. This saved my life! He jumped right into the formulae before even explaining the concepts!

@zihanzhang675 3 жыл бұрын

12 hours away from taking my final exam. And I am still be here to learn the basics :)

@Tamara-ju3lh 2 жыл бұрын

I hope it went well! I'm studying for the CPA (business section exam) and find myself coming back to the basics as well.

@yusufmld18 2 жыл бұрын

well now me 1 hour away for my exam :D

@Axiom61 2 жыл бұрын

24 hours for my final exam lol

@kevinsolieff9686 2 жыл бұрын

@@Axiom61 FOR ME 12 HOURS AWAY FOR ME HAHAHH

@Axiom61 2 жыл бұрын

@@kevinsolieff9686 Good luck on your exam, you will ace it 😄

@marymonika9920 6 жыл бұрын

U just made my mind so clear about these both topics which I'm not able to understand in my whole semester thank uh ! My clg sucks

@xinghuiteng9920 8 жыл бұрын

this is the best video so fay I watched on Cost of Equity. Well done

@milaakdeniz6317 7 жыл бұрын

I like the way you teach. It depends on fundamental basics. Thank you.

@ninagaby6569 7 жыл бұрын

Thank you so much!! I had big trouble trying to understand and apply this concept, but you've made it so easy to understand! :D

@robertyoung406 4 жыл бұрын

I'm terrible with definitions so I keep forgetting that Re is the COST. The business must have a return greater than their Re value if they want to be profitable. Thanks for the straightforward video!!

@andread9362 7 жыл бұрын

omg thank you! ur explanation is so good and clear.. the end bit on how to find the dividend growth is super helpful!😊

@SEEpath-kt7jm 8 жыл бұрын

Thank you home boy.....Saved me 2 hours of pain.....appreciate the clear explanation :)

@user-nb7sw6qs2j 7 жыл бұрын

This is the first video that made me understand. Thanks alot for kind explanations

@yasmeenn4332 3 жыл бұрын

Thankyouu!! My professor cant explain anything, and i was relying on myself to learn from a book, thankyou so much you make it easy

@jiaozhang6563 8 жыл бұрын

Thank you very much. The explanation is so good and clear.

@gowris4484 4 жыл бұрын

Thanks and happy that I found this video - clear explanation of concept

@niki7159 4 жыл бұрын

This is very helpful. Simplicity is the best.

@user-od5uz7xx1e Жыл бұрын

Thank you for helping me understand the basics.

@boiledpotato9826 7 жыл бұрын

well informed and clear video. thanks.

@giangbui6042 22 күн бұрын

It's such a great lesson. Many thanks

@michaelsimmons5401 5 жыл бұрын

Thanks, excellent lesson!

@SuperGrey95 8 жыл бұрын

Best explanation ever !!

@masontrappe8216 6 жыл бұрын

the video has helped alot would you be able to do one about using the CAPM formula, will be much appreciated

@manfredpurkarthofer7862 5 жыл бұрын

Thanks for the genius art of explaining this topic!

@commerceandfinanceacademy 4 жыл бұрын

1).kzfaq.info/get/bejne/asdynaqdyt2skZs.html :- Cost of Equity for Dividend paying firms within 6 mins :) 2).kzfaq.info/get/bejne/rKmPf8hjuZ2xdpc.html :- Cost of Capital Introduction with brilliant PPT animation.

@hariharansekar6026 3 жыл бұрын

Amazing explanation

@meryaltamirano8681 6 жыл бұрын

Good video ! I understand !!! Where Is your video about cost of debt?

@shreepadpurkar9835 4 жыл бұрын

Well explained , step by step in a simple manner. Thanks a lot .

@commerceandfinanceacademy 4 жыл бұрын

@lisamhango4386 Жыл бұрын

Well explained. Thank you

@yositasunintaboon4455 3 жыл бұрын

thank you so much for sharing this helpful video

@TheZeroskull3 8 жыл бұрын

very nice job ! helped me alot

@iamawinner111 10 күн бұрын

Enjoyed thoroughly 💖

@NayanDX9 8 жыл бұрын

the video is well-informed :)

@yamenomeira2158 6 жыл бұрын

thank you very match thanks to your explanation

@nicholasseah8068 3 жыл бұрын

Beautiful, truly

@felixmaume5641 3 жыл бұрын

outstanding......................

@Thankyouobamabasedgod 6 жыл бұрын

thanks for the help mate

@roy12386 Жыл бұрын

super useful video thanks

@thuscomeguerriero 6 жыл бұрын

Good penmanship!

@prabhjotkaur6729 7 жыл бұрын

thank you so much this video helped me alot:)

@muhammadumerkhan7420 6 жыл бұрын

Very helpful

@davidndirangu4414 3 жыл бұрын

Thanks so much the growth factor was an issue

@3650days Жыл бұрын

👍🏻👍🏻 thanks so much! 2:30 our cost is their return

@nsadriana3153 4 жыл бұрын

Thank you so much

@reactionswithreitumetse3790 2 жыл бұрын

Great video

@dailyfuel5810 5 жыл бұрын

Love u man from India ❤

@hashemeshanouq7351 6 жыл бұрын

Well done

@sarahshehata3267 4 жыл бұрын

greattttt ..where is the rest of this series plzzz

@user-iy7zs9go8t 3 жыл бұрын

great content, keep it up!!

@ntcuong01ct1 3 жыл бұрын

Dear friends, I have a question: Could you explain the relationship between Capital structure and company value?. Thanks.

@eltajbabazade1189 4 жыл бұрын

Thank you 🙏

@3dforex84 4 жыл бұрын

When watching this video I feel like I have graduated already. So excellent

@littleoldme8030 7 жыл бұрын

I wish you were my professor :D

@monicarutanhira8896 6 жыл бұрын

so helpful...one of the best explanatons

@thiquynhgiaongo2974 2 жыл бұрын

thank you a lot

@EhsnSuri9 2 жыл бұрын

Which marker/pen is that? It writes so nicely

@meaya7 6 жыл бұрын

thank you fpr spoon feeding me sir!

@ronaldyeo8277 Жыл бұрын

This is a really great video. So just to clarify, D1 is the current dividend, which is $3 x 107%?

@AnikiSiari 8 жыл бұрын

Where has this been all semester long?!?!?!?!?! I'm studying for my final exams!!!

@ramyshaaban685 5 жыл бұрын

summarizing the whole semester in 13 minutes :)

@Pages_Perfected 3 жыл бұрын

i'm in my first lesson and HELP

@palavvrushali4975 6 жыл бұрын

any suggestion of a cost of capital

@fresa5438 2 жыл бұрын

mantap terimakasih (thank you)

@leratolikhomo1649 6 жыл бұрын

I subscribed. Sir I like yoooouuuuuuuu.

@tahmidkamal2203 5 жыл бұрын

Hi very effective vedio. What is the name of a book book for only to be expert easily on the topic " Cost of Capital " ??

@chrisweber759 6 жыл бұрын

If a company uses cash from it's retained earnings would that still count as equity and what would it's cost be?

@gontsemokone64 Жыл бұрын

get i get link for one where you use SML Approach to calcululate cost of capital

@komorebiii__7636 7 жыл бұрын

thank you so much

@commerceandfinanceacademy 4 жыл бұрын

@HK-ri9bh 3 жыл бұрын

Thank youu

@prem52000 Жыл бұрын

Wonderful presentation. The only correction i find is the growth from 2010 to 2011 which was $2 to $8 results to 300% hence the average of 67.5% should be corrected to 100.83%.

@bobagorof Жыл бұрын

I found this presentation pretty painful to watch. Repeating basic concepts and covering them really slowly, then bringing in a magic formula without explanation as to how it was derived, and plugging some numbers in without explaining why the resulting figure is important rather than, say, 1% less. A definitive statement that what is important about cost of equity is what you're using it for (not who gave it to you... which would include their expected return), again without explaining the reasoning behind it. Very poorly paced or explained, in my opinion. And that's not even mentioning the repeated mispronunciation of "debt".

@dalyasalama2506 2 жыл бұрын

hii there on the last part how did you calculate the value of g i couldnt understand

@radhikagoel6268 7 жыл бұрын

Hey where are other videos?

@alexrfhk1634 2 жыл бұрын

I have a question on how to find ‘g’. From 2010 to 2011, there is 2 to 8 which should be 300% increase. Why it is 200%?

@jyotiyadav2449 3 жыл бұрын

Cost of convertible preference shares in wacc?

@akt2948 4 жыл бұрын

Man are u always great like that 😁👍🏼

@commerceandfinanceacademy 4 жыл бұрын

@FireWorksInJuly 2 жыл бұрын

I don’t understand how you calculated g at the end of the video to be 64% but in your example it was only 7%. Can you explain?

@deji2779 6 жыл бұрын

How do you find the average?

@chunluo6033 5 жыл бұрын

better than my teather

@kentheengineer592 2 жыл бұрын

actually you need to pay people but it doesn't have to be money, businesses prefer money because cash is usually a type of promissory note that has been secured thus it's called a security, if the issuer of money is unable to repay it's debts then based on litagation and corperate liability the assets will be used to discharge the debt and repay the creditor otherwise the creditor is at risk to take a Loss is based on certain types of promissory notes or types of bills of exchange that can be all traded for banknotes on demand by calling the BEP and making a deal with them

@kentheengineer592 2 жыл бұрын

how to establish ownership of any thing before the project begins is what holds people back from starting a business

@kentheengineer592 Жыл бұрын

1:12 a bit of a misunderstanding really allow me to explain ppl can be paid using deffered assets that can be leased in exchange for labor so

@kanishk2643 7 жыл бұрын

What about new companies who don't have share in the market? How do you estimate the Po in the equation unless, there is some other method....?

@RahulSingh-os2cl 4 жыл бұрын

Then, there will be no Equity. So, no need of Ke

@josejade2152 2 жыл бұрын

Yr 2010 to Yr 2011 the growth rate is 300% not 200% right? Correct me if im wrong.

@trevorkevinsweeney9099 3 жыл бұрын

My exam is in an hour I am going through this 😭😂😂😂 thank you

@alikaraca163 Жыл бұрын

Nice presentation but I gotta make some corrections. In your formula, P0 and D0 represent the same year, to the extent that I understand in your formula. if so, the share price's year and dividend of $3 last year mismatch in your question which is not correct. Because when you apply the growth model formula the share price you are finding is the current year. But, you are saying the current year is last year which is not.

@renzeldiabo5889 2 жыл бұрын

Where is the part 2

@ntcuong01ct1 3 жыл бұрын

I have a question: cost of capital = net revenue * WACC, right?.

@gamingonly7679 7 жыл бұрын

The growth rate between 2011 and 2010 is 300%?? (2011-2010)/2010? or i am calculate at the wrong way

@IMikeyyP 7 жыл бұрын

Yes it's 300% you are correct.

@bggunny6895 7 жыл бұрын

yup 300%

@machoocho1 6 жыл бұрын

Same here... I think its 300%.

@Shamikism 6 жыл бұрын

got them correct.

@samaysoni4015 5 жыл бұрын

Yup

@NA-cx8of 7 жыл бұрын

Ok so I know my cost of equity is 15%. Do I compare it to Return on Equity or Return on Investment?

@chizomamangela847 4 жыл бұрын

Thanks a lot sir. Your lecture was very useful to me on Do and D1

@redpen_24 8 жыл бұрын

thank you boy. . . :-)

@innocentnyamongo4745 6 жыл бұрын

@swathivadlamani7448 4 жыл бұрын

I still wonder how you got 200%, 37.5 and 40%?

@anjaliiii689 5 жыл бұрын

B is silent in debt ... we call it det ..

@stfds7857 6 жыл бұрын

you were too cute m8, wish you used CAPM though because that's what i need help with zjzjsjsj

@khosi_leighlifestyle8846 3 жыл бұрын

What does SML stands for?

@prem52000 Жыл бұрын

The security market line

@alexandervoronin5323 4 жыл бұрын

What happens if a company becomes so profitable it can repay all of its debt and buyback all of its equity?

@VaibhavBirange993 5 жыл бұрын

Does anyone find this guy's voice similar to Jesse Pinkman? Or is it just me?

@Sky-pg6xy 3 жыл бұрын

Why is 2$ to 8$ 200% and not 300%?

@anjaliiii689 5 жыл бұрын

Are you Rob Stark??? Your accent is exactly like him .. i love your voice too !! Marry me

@mithleshgajar8621 4 жыл бұрын

This is happening too much.

@commerceandfinanceacademy 4 жыл бұрын

@MEHBOOBZARGAR 7 жыл бұрын

anyone here to solve a question??

@romeshkirpalani848 5 жыл бұрын

2014 and still using calculator and paper...forget about equity or debt....there will be no growth man...

@dougzembiec9995 7 жыл бұрын

growth rate is 51,83% BTW......

@shanebosch6403 7 жыл бұрын

Doug Zembiec no, he is correct. The growth was for three years, not four. It doesn't mean that because there's 4 years that you divide by 4, as 2010 was the base year in this example.

@MissIsabelleEwah 6 жыл бұрын

he was wrong. He put 200 instead of 300% rise from year 2010-2011.