This session continues the review of capital budgeting metrics and describes the calculation and use of the cost of capital concept. Specific topics covered include:
• Calculation and interpretation of the internal rate of return, payback period, and discounted payback period capital budgeting metrics
• A description of the assumptions and models used to estimate the individual components of the cost of capital (i.e., the cost of equity and the cost of debt)
• Calculation and interpretation of the cost of capital.