5 concepts
The Cost of Debt
The cost of debt is a calculation taking into account the risk premium, the risk-free rate and taxes.
The Cost of Preferred Stock
The cost of preferred stock is equal to the preferred dividend divided by the preferred stock price, plus the expected growth rate.
The Cost of Common Equity
The cost of common equity is an imperfect calculation, an estimation based upon valuing the firms risk relative to the market.
The Cost of Retained Earnings
Due to the relationship between retained earnings and dividends, the cost of retained earnings as a source of capital is relative to the overall cost of equity.
The Cost of New Common Stock
Issuing new common stock is a time intensive process that gives access to capital with various direct and indirect costs.