Long-term financial decisions should be based on the question if investing (in a new project or asset), will provide the required rate of return.

The cost of capital provides such an answer and it plays a key role in financial decision-making across the organisation and is used in project appraisals, project finance, company valuation, mergers and acquisitions etc.

At its basic level, the formula of the weighted average cost of capital is easy to understand, though in reality the theory behind it, is fraught with problems. This course will take you through the key theories and concepts and challenges these concepts when estimating the cost of debt and the cost of equity.

You will learn about 

• The key theories used for calculating the cost of debt and the cost of equity
• The hurdle rate versus WACC
• Learn why managers change the cost of capital in practice
• How to select market and book values
• Gordons growth model
• The Capital Asset Pricing model
• The market risk premium
• Using Beta as a company's risk benchmark versus the market
• Credit risk and ratings
• The effects on capital expenditure projects
•  International considerations
• How to apply the theories in more or less efficient markets
•  How to challenge conventional theory, when the risk-free rate, beta and equity risk premium are not available or have diverted from their norm
• Understand the relationship between gearing and the cost of capital

Course format

This course will be taught using a combination of formal instructions, combined with practical and interactive exercises to reinforce the concepts taught in each section of the course.

Practice-based learning and critical engagement is a key theme through all our courses allowing delegates to acquire the needed skills and techniques to be applied as soon as they are learned and developed.

• CFOs, finance managers, and controllers involved in strategic capital decisions.
• FP&A professionals using discount rates for budgeting, valuation, and investment cases.
• Financial analysts seeking stronger expertise in WACC, CAPM, and valuation inputs.
• Corporate finance and M&A professionals assessing deals, acquisitions, and restructuring options.
• Investment professionals evaluating returns versus risk-adjusted hurdle rates.
• Business owners and directors making long-term financing or expansion decisions.
• Consultants advising clients on valuation, funding strategy, or capital structure.
• Bankers and credit professionals analysing debt costs, leverage, and risk premiums.
• Project managers preparing CAPEX proposals requiring robust return assumptions.
• Professionals who need to confidently calculate, challenge, or apply the cost of capital.

Day 1: (09:00 – 17:00)

09:00 – 10:00 | Introduction to the cost of capital

• The application in finance

• The use in project appraisals, company valuation, mergers and acquisitions & performance measurement.

10:00 – 11:15 | Measuring the cost of equity

• The capital asset pricing model

• Perfect and efficient markets theory

• Basics on portfolio theory

• The dividend valuation model

• Estimating the risk free rate

• Determining beta

• Time horizon

• the equity risk premium

• Peer group analysis

11:15 – 11:30 | Morning Break

11:30 – 12:30 | Measuring the cost of debt

• The actual cost of debt

• The credit risk and spread

• Tax and the cost of Debt

• The hurdle rate versus WACC

12:30 – 13:00 | Determine the Weighted Average Cost of Capital

• Calculate the weighted average

• The capital structure

• Book value versus market value

13:00 – 14:00 | Lunch Break

14:00 – 15:30 | The cost of capital and the International context

• Market efficiency problems

• Dealing with country related risk

• The local versus global perspective

• Data availability and robustness

• The hurdle rate versus WACC

• Adjusting the cost of capital

15:30 – 15:45 | Afternoon Break

15:45 – 17:00 | Practical Applications and Q&A

• Applying WACC in valuation and investment decisions

• Common mistakes and best practices

• Questions and answers

• Sophie L., Investment Analyst: "Highly valuable training for anyone involved in valuation or project appraisal. The international perspective was especially useful."
• David K., CFO: "Well-structured and insightful course. It strengthened my understanding of capital structure and improved decision-making confidence."