Cost of Capital

Specialisation: Valuation

Course summary

What does the cost of capital represent? What are the steps in estimating the cost of capital? What are the challenges when estimating the cost of capital? Which models should I use? How do I account for market imperfections such as country risk? These questions and many more will be answered during this course. Upon finishing this course you will have a thorough understanding of the cost of capital including any advanced valuation issues.

Six lessons covering:

  • Introduction to the Cost of Capital – Foundations of the cost of capital & WACC
  • The Cost of Equity – Estimating the cost of equity using the CAPM
  • Extensions of CAPM & other Cost of Equity Models – Additional risk premiums and other models
  • The Cost of Debt – Estimating the cost of debt
  • The Cost of Hybrid Securities – Including hybrid securities in the cost of capital
  • Capital structure and weightings – Estimate the capital weights used in the WACC
The course is designed for young professionals with up to two years of working experience in corporate finance advisory or related fields who wish to enhance their knowledge of the cost of capital and its application in corporate valuation. Learners are expected to have a good understanding of general valuation theory.

Learning goals

After finishing the course successfully you:

  • Understand the most important foundations of the cost of capital.
  • Know how to estimate the cost of equity in a consistent manner using the CAPM model.
  • Be able to incorporate market imperfections, such as the small firm premium and country risk, into the cost of capital.
  • Know how to estimate the cost of debt.
  • Know how to incorporate hybrid securities and off-balance sheet financing in the cost of capital.
  • Be able to calculate the weighted average cost of capital relevant for corporate valuation.

Course structure

Each lesson is structured in multiple short videos and ends with an exam. In addition to the videos and quizzes you can find readings, best practice templates and related videos about trending topics in the - course materials section - on the left (once you have entered the course). These materials are part of the curriculum and required for the exams.

To complete the course successfully and obtain a course certificate you are required to achieve an average score of 75% on your exams. Note that you can retake exams.

Course masters

Matthies

Matthies Haentjens
Valuation professional

Matthies Haentjens is an experienced M&A and Valuation advisor with a passion for taking financial training for young professionals to the next level. Prior to starting Postinitial Matthies worked at KPMG Corporate Finance and private equity firm Axivate Capital Partners