Cost-of-capital foundations

Cost-of-capital foundations

Bachelor of Business Studies (BBS) — Second Year

Subject: Fundamentals of Financial Management (MGT 215)

Unit 6: Cost of Capital

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of cost-of-capital foundations.
• Apply the relevant financial model, calculation or analytical approach and explain its assumptions and decision implications.

Curriculum Scope

• Concept
• Applications to financial decisions

Detailed Microsyllabus

1. Cost-of-capital foundations

   1. Required returns of capital providers.
   2. Financing costs and opportunity cost.
   3. Use as a benchmark in financial decisions.

2. Applications

   1. Investment appraisal and funding comparisons.
   2. Appropriate matching of project risk and discount rate.
   3. Avoid treating one company-wide rate as suitable for every project.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 41-43.

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.