Cost of capital – practical real world

In the real work cost of capital starts from the Market values and the beta asset of the company you would like to invest in ….
for DVM
before we go and get previous dividend paid to the the growth and the current dividend … or

CAPM
we would find the investment in risk free (treasury bill or fixed deposit) of the company … then we find the market rate or the risk in the capital market when funds are issued …

then we factor the beta asset of the company being sold into the companies buying ‘s market value to get the new beta equity for investing in the company held for sale .. sorry for my english.

all this data is needed plus the Debenture or loan in the buying company..

Steps:
– know your beta asset of the new company held for sale
– if you are using CAPM you need to know the beta equity if the buying company acquires the selling company.
– if using DVM we need data from the buying company … that is P= (Do(1+g)^n)/ (Ke-g)
– then you find the borrowing of the company and it market and face values
– then compute the IRR is the company intends to redeem the borrowed money

put the all together then we have a cost of capital…simple 🙂

bad english anyway….. cos i have other question to look at ….. you help me bring out my potential