Cost of Capital and Cost of Equity | Business Finance
goo.gl/qQjWG8 for more free video tutorials covering Business Finance.
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: 142
Holy eff, my professor is impossible to understand. This saved my life! He jumped right into the formulae before even explaining the concepts!
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 😄
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
this is the best video so fay I watched on Cost of Equity. Well done
omg thank you! ur explanation is so good and clear.. the end bit on how to find the dividend growth is super helpful!😊
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
Thank you home boy.....Saved me 2 hours of pain.....appreciate the clear explanation :)
I like the way you teach. It depends on fundamental basics. Thank you.
Thank you very much. The explanation is so good and clear.
This is the first video that made me understand. Thanks alot for kind explanations
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!!
the video is well-informed :)
Thanks and happy that I found this video - clear explanation of concept
Thankyouu!! My professor cant explain anything, and i was relying on myself to learn from a book, thankyou so much you make it easy
Thanks, excellent lesson!
Best explanation ever !!
well informed and clear video. thanks.
Thank you for helping me understand the basics.
This is very helpful. Simplicity is the best.
very nice job ! helped me alot
thank you so much this video helped me alot:)
super useful video thanks
Well explained. Thank you
great content, keep it up!!
thank you so much for sharing this helpful video
Thanks for the genius art of explaining this topic!
@commerceandfinanceacademy
4 жыл бұрын
1).kzread.info/dash/bejne/ZpV2zKmlldqukco.html :- Cost of Equity for Dividend paying firms within 6 mins :) 2).kzread.info/dash/bejne/qHeTrsdrhJqzdsY.html :- Cost of Capital Introduction with brilliant PPT animation.
thanks for the help mate
Well explained , step by step in a simple manner. Thanks a lot .
@commerceandfinanceacademy
4 жыл бұрын
1).kzread.info/dash/bejne/ZpV2zKmlldqukco.html :- Cost of Equity for Dividend paying firms within 6 mins :) 2).kzread.info/dash/bejne/qHeTrsdrhJqzdsY.html :- Cost of Capital Introduction with brilliant PPT animation.
Amazing explanation
Beautiful, truly
thank you very match thanks to your explanation
Great video
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
so helpful...one of the best explanatons
When watching this video I feel like I have graduated already. So excellent
Very helpful
hii there on the last part how did you calculate the value of g i couldnt understand
Thank you so much
get i get link for one where you use SML Approach to calcululate cost of capital
the video has helped alot would you be able to do one about using the CAPM formula, will be much appreciated
Love u man from India ❤
Good video ! I understand !!! Where Is your video about cost of debt?
thank you a lot
Dear friends, I have a question: Could you explain the relationship between Capital structure and company value?. Thanks.
I wish you were my professor :D
Thank you 🙏
👍🏻👍🏻 thanks so much! 2:30 our cost is their return
Good penmanship!
outstanding......................
Well done
Which marker/pen is that? It writes so nicely
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".
thank you fpr spoon feeding me sir!
Thanks so much the growth factor was an issue
Hey where are other videos?
This is a really great video. So just to clarify, D1 is the current dividend, which is $3 x 107%?
thank you so much
@commerceandfinanceacademy
4 жыл бұрын
1).kzread.info/dash/bejne/ZpV2zKmlldqukco.html :- Cost of Equity for Dividend paying firms within 6 mins :) 2).kzread.info/dash/bejne/qHeTrsdrhJqzdsY.html :- Cost of Capital Introduction with brilliant PPT animation.
Cost of convertible preference shares in wacc?
I subscribed. Sir I like yoooouuuuuuuu.
mantap terimakasih (thank you)
Thank youu
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%?
greattttt ..where is the rest of this series plzzz
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?
Man are u always great like that 😁👍🏼
@commerceandfinanceacademy
4 жыл бұрын
1).kzread.info/dash/bejne/ZpV2zKmlldqukco.html :- Cost of Equity for Dividend paying firms within 6 mins :) 2).kzread.info/dash/bejne/qHeTrsdrhJqzdsY.html :- Cost of Capital Introduction with brilliant PPT animation.
any suggestion of a cost of capital
If a company uses cash from it's retained earnings would that still count as equity and what would it's cost be?
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
Yr 2010 to Yr 2011 the growth rate is 300% not 200% right? Correct me if im wrong.
How do you find the average?
how to establish ownership of any thing before the project begins is what holds people back from starting a business
Hi very effective vedio. What is the name of a book book for only to be expert easily on the topic " Cost of Capital " ??
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
Where is the part 2
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
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
My exam is in an hour I am going through this 😭😂😂😂 thank you
better than my teather
Ok so I know my cost of equity is 15%. Do I compare it to Return on Equity or Return on Investment?
@chizomamangela847
3 жыл бұрын
Thanks a lot sir. Your lecture was very useful to me on Do and D1
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 $3 last year mismatch in your question which is not correct. Because when you apply the growth model formula the share price you are finding is the current year. But, you are saying the current year is last year which is not.
I have a question: cost of capital = net revenue * WACC, right?.
What does SML stands for?
@prem52000
Жыл бұрын
The security market line
thank you boy. . . :-)
@innocentnyamongo4745
5 жыл бұрын
Hi
B is silent in debt ... we call it det ..
you were too cute m8, wish you used CAPM though because that's what i need help with zjzjsjsj
Are you Rob Stark??? Your accent is exactly like him .. i love your voice too !! Marry me
@mithleshgajar8621
4 жыл бұрын
This is happening too much.
@commerceandfinanceacademy
4 жыл бұрын
1).kzread.info/dash/bejne/ZpV2zKmlldqukco.html :- Cost of Equity for Dividend paying firms within 6 mins :) 2).kzread.info/dash/bejne/qHeTrsdrhJqzdsY.html :- Cost of Capital Introduction with brilliant PPT animation.
I still wonder how you got 200%, 37.5 and 40%?
Does anyone find this guy's voice similar to Jesse Pinkman? Or is it just me?
What happens if a company becomes so profitable it can repay all of its debt and buyback all of its equity?
Why is 2$ to 8$ 200% and not 300%?
2014 and still using calculator and paper...forget about equity or debt....there will be no growth man...
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.
anyone here to solve a question??
HELP HELP HELP HELP
Debt is pronounced like 'death'. You are pronouncing it like 'depth'.
@normanclayton6015
7 жыл бұрын
17
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