Component costs

Component costs

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 component costs.
• Apply the relevant financial model, calculation or analytical approach and explain its assumptions and decision implications.

Curriculum Scope

• Debt
• Preferred stock
• Retained earnings
• New common stock

Detailed Microsyllabus

1. Debt and preferred capital

   1. Estimate debt cost from relevant financing cash flows.
   2. Apply the tax treatment supplied in the exercise.
   3. Calculate preferred-stock cost including stated issue costs.

2. Equity components

   1. Retained earnings and shareholders' required return.
   2. New common-stock financing and flotation costs.
   3. Use the prescribed estimation model and assumptions.

---

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.