Cost of long-term funds - part 1
Taught by James Griffiths · AI tutor support included
You'll learn how companies calculate the cost of their long-term financing—both debt and equity—and why this matters for investment decisions.
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In this lesson
- 0:00 Cost of long term funds overview
- 0:28 Risk and return relationship explained
- 1:31 Repayment hierarchy in liquidation
- 3:44 Cost increases with financial risk
About this lesson
This video introduces the risk and return relationship that underpins all financing costs, then walks you through the hierarchy of repayment in liquidation to understand which finance sources carry higher risk and therefore higher costs. You'll see how these individual costs combine into the weighted average cost of capital, a key metric in financial management. While the formulas look complex, you'll discover they're provided in the exam—it's really about understanding what they mean and plugging in the numbers correctly.
Duration: 4m
Transcript
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