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Risk-Free Interest Rate
A risk-free interest rate is rate of interests that would be paid by fixed income securities that contains no risk at all. For a very long time short-term US Treasury securities was used to d
http://www.investingforbeginners.eu/riskfree_interest_rate
Cost of Equity
Cost of equity is the rate of return that is required by equity owners from their investment. Of course, requirements of the shareholders have to be real and meet market conditions as well. Basically cost of equi
http://www.investingforbeginners.eu/cost_of_equity
DCF Valuation
Discounted Cash Flow Analysis DCF valuation might be applied to any asset that generates positive free cash flow or is expected to generate that cash flow in the future. DCF valuation might be directly applied t
http://www.investingforbeginners.eu/dcf_valuation
WACC
WACC (Weighted Average Capital Cost) shows cost of capital when capital is consisted of both equity and debt capital. So WACC simply calculates the weighted average between equity cost and debt cost.
http://www.investingforbeginners.eu/wacc
cost of debt
cost of debt shows what the capital cost of the company for its debt capital is. Basically company’s capital consists of two parts: debt capital and equity capital. (A mixed capital like mezzanine financing
http://www.investingforbeginners.eu/cost_of_debt
cost of debt Formula
cost of debt formula Theoretical cost of debt formula: Before tax cost of debt = Risk free rate + Credit risk premium After tax cost of debt = (Risk free rate + Credit risk premiu
http://www.investingforbeginners.eu/cost_of_debt_formula
Before Tax cost of debt
Before tax cost of debt (or pretax cost of debt) usually is a standard cost of debt. When you determine the interest rate paid by the company for its debt, it is equal to debt cost before tax. However, interest e
http://www.investingforbeginners.eu/before_tax_cost_of_debt
After Tax cost of debt
There are two types of the debt cost: ‘before tax cost of debt’ and after tax cost of debt. The only difference between those is that the first one is equal to the interest rate paid by company while
http://www.investingforbeginners.eu/after_tax_cost_of_debt
cost of debt Calculation
The cost of debt is easy to calculate if they are required data. Actually, there are few methods to get the cost of debt, but some of those are more accurate some less. If you want that your result would be more
http://www.investingforbeginners.eu/cost_of_debt_calculation
Cost of Capital
Capital of every company consists of two parts: equity capital and debt capital (only if company has no financial debts it has only equity capital). Both these capital sources have their costs and this is cost of
http://www.investingforbeginners.eu/cost_of_capital
NOPAT
NOPAT (‘net operating profit after tax’ or ‘after tax operating profit’) is equal to operating profit less taxes. It is adjusted by tax rate because the part cost of debt which is part of
http://www.investingforbeginners.eu/nopat
Return on Invested Capital
Return on invested capital (ROIC) or also called return on capital is a financial ratio employed to measure nominal company’s return that is earned by capital invested in operating asset. Basically return o
http://www.investingforbeginners.eu/return_on_invested_capital
