The cost ratio of equity capital should include the return on investment required by shareholders and the equity finance expense ratio.
If the company's equity cost ratio is low, the cost of equity capital will be small, thus reducing the total cost of capital. (Under the condition that other capital remains unchanged)
The cost of equity capital is the required rate of return on investment calculated according to financial theory, which is the required rate of return when investors invest in the equity of enterprises.
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Question 2: What does the cost of capital mean? Hello, classmate, I'm glad to answer your question!
Cost of capital The minimum rate of return required by the capital budget plan. Capital cost can include debt cost and equity cost.
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Question 3: Capital cost rate Capital cost rate: refers to the ratio between the company's expenses and the amount of funds effectively raised, usually expressed as a percentage. In the practice of enterprise financing, the relative number of capital cost is usually adopted, that is, the capital cost rate.
The capital cost rate refers to the annual compound interest rate IRR paid by the use of funds. In another definition, the cost of capital rate is the ratio of the expenses borne by the enterprise to the net funds raised.
(1) capital cost rate = capital occupation fee/net financing = capital occupation fee/[total financing ×( 1- financing rate)]
(2) Long-term loan capital cost rate = loan interest rate ×( 1- income tax rate)
(3) Bond capital cost ratio = (face value of bonds × coupon rate )×( 1- income tax rate)/[bond issue price × (1-bond financing rate)] (4) There are several formulas for calculating common stock capital cost ratio: risk-free interest rate+beta coefficient × (market return rate-risk-free interest rate).
If the dividend is fixed, then: common stock capital cost rate = annual fixed dividend/[common stock issue price ×( 1- common stock financing rate)].
If the dividend growth rate is fixed, the capital cost rate of common stock = expected dividend in the first year/[common stock issue price ×( 1- common stock financing rate)]+fixed dividend growth rate.
(5) The calculation formula of capital cost rate of retained earnings is basically the same as that of common stock, except that the fund-raising rate does not need to be considered.
Question 4: What does the capital rate cost = interest rate ×( 1- income tax rate) mean? Why do you want to cut taxes?
Question 5: What is the general capital cost ratio? This is the price of your occupation of funds.
For example, if you borrow money, the cost of capital is interest. Of course, the interest of financial management can be deducted, and the capital cost of borrowing = interest/loan *( 1- income tax rate). The use fee in financing expenses refers to the price paid for the use of funds, such as dividends paid to shareholders or interest paid to creditors.
If the matching annuity method is adopted in the preparation of the financial lease rent plan, the discount rate is usually the capital rate cost.
Cost rate. The individual cost of capital ratio is the ratio of the company's expenses to the amount of funds effectively raised. The basic calculation formula is as follows:
Or:
Among them:
K- cost of capital rate, expressed as a percentage;
D- cost amount;
P- the amount of funds raised;
F- the amount of financing expenses;
F- financing cost ratio, that is, the ratio of financing cost to financing amount.
Profit/cost ratio
Cost profit rate = profit/cost × 100%.
The higher this index is, the smaller the price paid by the enterprise for profit, the better the cost control and the stronger the profitability.
In which: cost = main business cost+operating expenses+management expenses+financial expenses.
Profit = operating profit+investment income+subsidy income+non-operating income-non-operating expenditure.
Individual labor and socially necessary labor can be divided into two parts: production cost and profit. Generally, these two parts of individual labor in the economy are called individual production cost and individual profit respectively, and these two parts of socially necessary labor are called average production cost and value profit respectively.
Average production cost and value profit are the weighted average of single production cost and single profit respectively. In economies with different technical levels, the influence of individual labor on product value is realized through its output weight. Output weight reflects the relationship between the technical level and the average technical level of an economy. Therefore, it can be further considered that the socially necessary labor of products is composed of production costs and profits determined by the weighted average technical level of products.
Note: The cost profit rate is determined by the tax bureaus of all provinces, autonomous regions and municipalities directly under the Central Government.
Comprehensive capital cost ratio
The comprehensive cost rate of capital refers to the cost rate of all long-term capital of a company, which is usually weighted by the proportion of various long-term capital, and the cost rate of a single capital is calculated by weighted average, so it is also called weighted average cost rate of capital. Therefore, the comprehensive capital cost rate is determined by two factors: the single capital cost rate and the long-term bond capital cost rate.
Calculation method editing
Calculation method of comprehensive capital cost rate;
According to the determinants of the comprehensive capital cost rate, after calculating the single capital cost rate and obtaining various long-term capital ratios, the comprehensive capital cost rate can be calculated according to the following formula: KW = KW = Kw =KiWi +KbWb +KpWp +KcWc +KrWr.
Where: KW-comprehensive capital cost rate;
Kj-the capital cost rate in J type;
WJ-J capital ratio.
Choice of Capital Value Basis in Comprehensive Capital Cost Rate
When calculating a company's comprehensive cost of capital, the capital structure or the proportion of various capitals in the total capital plays a decisive role. The proportion of all kinds of capital in a company depends on the determination of the value of all kinds of capital. There are three main options to determine the value of various capitals: book value, market value and target value.
(1) Determine the capital ratio according to the book value.
The book value is provided by accounting data, that is, it is directly obtained from the balance sheet, which is easy to calculate; Its defect is that the book value of capital may not match the market value. If the market value of capital has deviated a lot from the book value, it is unrealistic and objective to determine the capital ratio based on the book value, which is not conducive to the calculation of comprehensive capital cost rate and the decision-making of financing management.
(2) Determine the capital ratio according to the market value.
Determining the capital ratio by market value refers to determining the capital ratio of bonds and stocks according to the current capital market price, so as to calculate the comprehensive capital cost ratio.
(3) Determine the capital ratio according to the target value.
Determining the capital ratio according to the target value refers to determining the capital ratio of securities and stocks according to the company's expected future target market value, so as to calculate the comprehensive capital cost ratio. From the perspective of corporate financing management decision-making, a basic requirement of comprehensive capital cost ratio is that it should be suitable for the company's future target capital structure.
It is generally believed that when determining the capital ratio, the target value can reflect the expected target capital structure requirements. However, it is difficult to determine the target value of capital objectively, so market value should usually be chosen to determine the proportion of capital. In the company's fund-raising practice, target value and market price >>
Question 6: What is the difference between the capital cost rate and the capital cost rate? 10 points 1. The relationship between capital cost rate and necessary rate of return The capital cost rate refers to the cost of capital. Generally, it is calculated according to the weighted average cost of funds from various sources. If the equity financing is 5 million, the capital cost ratio 10%, the debt financing is 3 million, and the capital cost ratio is 6%, then the total capital cost ratio is10% * 500/(500+300)+6% * 300/(500+300) = 0.00. Using k is a habit, so when judging whether an investment project is feasible, it is necessary to compare the rate of return and the rate of capital cost. Investment projects are feasible only when the necessary rate of return is greater than or equal to the cost of capital rate. Otherwise, investment is a loss, and it is better not to invest. Second, the answer to the question is p= 12, b=7, a = 40,000 gross profit per unit product = P-B = 12-7 = 5 yuan/total gross profit per piece = 5 * 20,000 =10,000 yuan; Pre-tax profit in the fourth quarter:10,000-40,000-5,000,000 * 40. 4 =100000-40000-30000 = 30000 Yuan Pre-tax profit: 500000 * 40% * 6%/4 = 30000 Yuan After-tax net profit: 30000 * (1-30%) = 265438.
Question 7: Why is the capital rate cost represented by K, pronounced by pronunciation and generally represented by K?
Question 8: What does the capital cost ratio mean? Can you explain it briefly? Part of the funds you use comes from the original investment of the company's assets, and part comes from external financing and liabilities, such as shareholder investment and bank loans. The narrow sense of capital cost refers to the price you pay for using this part of the funds. Satisfied, please adopt.