The nominal dollar costs of capital can be converted into nominal BR costs of capital using the differential inflation rates in the two countries, just as the cost of equity was earlier in the chapter.

When estimating the cost of equity for Bookscape, we assumed that the company would be funded using the same market debt to equity ratio as the book/publishing industry. Staying consistent, we will use the market debt to capital ratio to compute the cost of capital for the firm. We will also present two estimates of the cost of capital - one using the market beta and the other using the total beta:

Money Mogul

Money Mogul

Get All The Support And Guidance You Need To Be A Success At Being A Money Mogul. This Book Is One Of The Most Valuable Resources In The World When It Comes To How to Maintain the Pledge to Fix Your Finances from Your New Year’s Resolution.

Get My Free Ebook

Post a comment