Final Flashcards
(29 cards)
Discount rate that captures the riskiness of the firm
WACC
Wacc
Discount rate that captures the riskiness of the firm
Cost of debt =
YTM
rE formula (equity and debt)
(EBIT-Interest)/E
rE formula (no debt)
EBIT/E
Price per share of a firm formula
Market value of equity/#shares outstanding
Cost of equity
rE
Cost of capital
r0
Cost of debt
rD
Return on (levered) equity
rE
Return on (unlevered) equity
r0
The return that investors require when they invest in bonds (interest rate)
rD
rE
Cost of equity
Return on (levered) equity
Return on common stock
Return on common stock
rE
r0
Cost of capital Return on (unlevered) equity
rD
Cost of debt
Interest rate
YTM
Leverage formula
Book value of debt/market value of a firm
Formula for number of new shares
Amount raised for company = number of shares sold x subscription price
How many rights will it take to purchase one new share formula
Number of rights (#shares outstanding) / #new shares
ex rights share price formula
Total paid / shares now owned
Value of one right formula
Current stock price - ‘ex rights’ share price
Ex rights share price
Value of a share, post rights offering
Amount raised for company/subscription price =
Number of new shares sold
Number of rights/number of new shares
How many rights it will take to purchase one new share
