Kasper Meisner Nielsen Corporate Finance: Part I Cost of Capital Download free books at Download free eBooks at bookboon.com 2 Corporate Finance: Part I Cost of Capital Download free eBooks at bookboon.com 3 Corporate Finance Part I: Cost of Capital 1 st edition © 2010 bookboon.com ISBN 978-87-7681-568-4 Download free eBooks at bookboon.com Click on the ad to read more Corporate Finance Part I: Cost of Capital 4 Contents Contents 1 Introduction 6 2 e Objective of the Firm 7 3 Present value and opportunity cost of capital 8 3.1 Compounded versus simple interest 8 3.2 Present value 8 3.3 Future value 9 3.4 Principle of value additivity 10 3.5 Net present value 10 3.6 Perpetuities and annuities 11 3.7 Nominal and real rates of interest 13 3.8 Valuing bonds using present value formulas 14 3.9 Valuing stocks using present value formulas 18 www.sylvania.com We do not reinvent the wheel we reinvent light. Fascinating lighting offers an infinite spectrum of possibilities: Innovative technologies and new markets provide both opportunities and challenges. An environment in which your expertise is in high demand. Enjoy the supportive working atmosphere within our global group and benefit from international career paths. Implement sustainable ideas in close cooperation with other specialists and contribute to influencing our future. Come and join us in reinventing light every day. Light is OSRAM Download free eBooks at bookboon.com Click on the ad to read more Corporate Finance Part I: Cost of Capital 5 Contents 4 e net present value investment rule 21 5 Risk, return and opportunity cost of capital 24 5.1 Risk and risk premia 24 5.2 e eect of diversication on risk 26 5.3 Measuring market risk 28 5.4 Portfolio risk and return 29 5.5 Portfolio theory 32 5.6 Capital assets pricing model (CAPM) 35 5.7 Alternative asset pricing models 37 Index 39 360° thinking . © Deloitte & Touche LLP and affiliated entities. Discover the truth at www.deloitte.ca/careers