Weighted Average Cost of Capital for Shree Cement Limited

Code : FAC0055

Year :
2019

Industry : Cement

Region : India

Teaching Note:Available

Structured Assignment :Not Available

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Introduction:“Good evening, all of you,” said Dr. John Martin (Martin), Professor of Finance, to the first-year MBA students chit-chatting in the corridor leading to the campus library at Alien Business School, Mumbai. For a few seconds, the corridor echoed with the voices of the students greeting the Professor, who was one of the popular faculty members in college. “Professor, we are going to have a discussion on the basic concepts of finance in preparation for the upcoming finance class. Would you like to join us?” asked Ritu. “Oh, great!” replied Martin. “By the way, which concepts have you picked for discussion?” “Cost of capital,” replied Hina. “Okay, fine. We will discuss it in the reading room,” said Martin. Minutes later, around 10 students and the professor were in the reading room next to the campus library, ready to discuss the concept of cost of capital.

“Professor, are cost of capital and cost of equity the same?” Harsh set the ball rolling. “It depends on the structure of the capital. If the capital is financed only through equity, then the cost of equity will be equal to the cost of capital. Otherwise not,” said Martin. “Does this mean a firm can finance capital through other sources too?” asked Gopal...

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