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Hi
How can questions from COST OF CAPITAL (Part F of BPP book) be tested in upcoming June exams??Best regards
hi Tammi
Cmon i just wanted to rule out that i have left anything important for the exams… everyone knows that John and Kevin Kelly havent seen the paper but their guidance is extremely important for our preparation and who knows how many ppl will benefit from their replies around the world!!!we dont use the word CAN when asking from a fortune teller 😉 we ask “what WILL come” 😀
You must be able to calculate the cost of equity – using the dividend growth model and/or using capital asset pricing model.
You must be able to calculate the cost of debt (for irredeemable, and (more likely) redeemable debt)
You must be able to calculate the weighted average cost of capital.
You must be able to write about Modigliani and Millers theories about the effect of gearing on the WACC (but no calculations).He always asks something about it. Sometimes just a small bit as part of a bigger question (calculate the WACC and then use it to discount project cash flows). Sometimes a much bigger bit of the question.
The best way of seeing how he asks it is to look at previous exam questions.
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What are the most crucial past questions that likely to be much helpful in June F9
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