Stock prices, cost of capital and firm value

Stock prices, cost of capital and firm value

Bachelor of Business Studies (BBS) — Fourth Year

Subject: Fundamentals of Corporate Finance (FIN 250)

Unit 7: Capital Structure Decision

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of stock prices, cost of capital and firm value.
• Apply the relevant financial concepts or calculations and explain their assumptions, risks and analytical limits.

Curriculum Scope

• The effect of capital structure on stock prices and the cost of capital
• Capital structure and value of the firm

Detailed Microsyllabus

1. Capital-structure effects

   1. Debt and equity claims.
   2. Required returns and financing risk.
   3. Potential effects on stock value.

2. Firm value

   1. Compare structure and cost-of-capital relationships.
   2. State the theory's assumptions.
   3. Distinguish model results from practical financing evidence.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 80–82.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here. Examples involving current laws, rates, institutional products or Nepalese status must identify the relevant period and official materials; no changing numerical or legal requirements are invented here.