Week 05 - Equity capital, debt capital, CAPM and WACC
In the fifth week of lectures the lecturer explained us about the equity capital, debt capital, cost asset pricing model and weighted average cost of capital. Equity capital is funds paid into a business by investors in exchange for common or preferred stock. This represents the core funding of a business, to which debt funding may be added. Once invested, these funds are at risk at risk, since investors will not be rapid in the event of a corporate liquidation until the claims of all other credits have first been seen settled. Despite this risk, investors are willing to provide equity capital for one or more of the following reasons: Owing a sufficient number of shares gives an investor some degree of control over the business in which the investment has been made. The investee may periodically issue dividends to its stockholders The price of the shares may appreciate over time, so that investors can sell their shares for a profit Debt capital is knows as a part of t