Cost of Capital Practices in Bd

Topics: Capital asset pricing model, Interest, Weighted average cost of capital Pages: 12 (3765 words) Published: September 17, 2011
Report On:

Cost of capital and Bangladesh perspective

Prepared for:
Shabbir Ahmed
Department of Finance
University of Dhaka

Course Name: Financial Management (F-206)

Prepared by:

Group No: 1


Shabbir Ahmed
Department of Finance
University of Dhaka

Subject: Submission of Term Paper on “Cost of capital and Bangladesh Perspective” Dear Sir,
With profound reference towards the dignity of yours, we are very happy that we have been able to submit the report on the course named “Financial Management (F-206)” as a part of our academic activities. Here is the report on “Cost of capital and Bangladesh Perspective “ The topic that you have given us is really an important & interesting fact for us with the textual studies acquiring practical orientation about international Trade.


Sincerely yours,
Sumaiya Hafsa(15 – 176)

On behalf of the group Luminous
Department of Finance
University of Dhaka
Dated: 29th pril,2011


It is our refreshment stand to thank Shabbir Ahmed, the adhering Professor of the Department of Finance, in University of Dhaka for rendering us her expertise knowledge and giving us the opportunity of practical exposure through this report. In this regard, we would also like to thank ourselves as our good teamwork and successful team spirit. Without cooperation and the support from each other, it would not be possible to prepare such a resourceful report. Practical knowledge is deep-seated for the application of conjectural intelligence. Bearing this in mind, the course teacher introduced a program for the students of the course “Financial Management (F-206)” to prepare a report as a compulsory course requirement. As we are students of business school, so it’s very much important for us to have deep knowledge about the different aspects of International trade. Under this course we have gathered brief idea about international trade and finance. And by doing this report we used our theoretical knowledge in a practical situation. There are always some differences between theories and practical. This report bridges the gaps between them. So, lastly we would again like to express our heartfelt thanks to our honorable teacher for providing us the opportunity to apply classroom learning in a practical situation.



Cost of equity6

Cost of equity formula:7

Cost of Debt8

Weighted average cost of capital8

Capital structure9

Cost of capital Bangladesh perspective10

Cost of capital

The overall percentage cost of the funds used to finance a firm's assets. Cost of capital is a composite cost of the individual sources of funds including common stock, debt, preferred stock, and retained earnings. The overall cost of capital depends on the cost of each source and the proportion that source represents of all capital used by the firm. The goal of an individual or business is to limit investment to assets that provide a return that is higher than the cost of the capital that was used to finance those assets.

The cost of capital is the rate of return that providers of capital demand to compensate them for both the time value of their money, and risk. The cost of capital is specific to each particular type of capital a company uses. At the highest level these are the cost of equity and the cost of debt, but each class of shares, each class of debt securities, and each loan will have its own cost. It is possible to combine these to produce a single number for a companies cost of capital, the WACC. The cost of capital of a security is used to value securities, as the cost of capital is the appropriate discount rate to apply to the future cash flows that security will pay. For this reason, models that estimate the cost of...
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