The Cost of Capital
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Long term financial decisions should be based on the question if making the investment (in a new project or asset), will it 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 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 practise
  • 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 has diverted from its norm
  • Understand the relationship between gearing and the cost of capital.

Recommended background

The course is designed for all professionals involved in long term planning, using, in need to calculate or to challenge the weighted average cost of capital. Understand its role and application as a discount factor or the effects on the capital structure. You could be working for a consulting firm, a public or private company, a family business, a bank or private equity firm.

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.


Day 1:


Introduction to the cost of capital

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


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


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


Determine the Weighted Average Cost of Capital

  • Calculate the weighted average
  • The capital structure
  • Book value versus market value


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



*** Very good course, teacher, and approach. Material available on-line prior the course + request to the participants about their expectations from the course.

*** A pleasant and knowledgeable instructor with a lot of interaction among participants.

*** Congratulations! Very well done. Nothing more to add.

*** I really appreciated the empathy and skills of the lecturer Bruno Bosch. Also, the size of the group (7 persons) was perfect to have the necessary interactivity throughout the course.

Lerne, wie es dir am besten passt!


Kris De Clercq, MBA

Kris has lectured finance to managers for more than 25 years in Europe and Eastern Europe. His teaching as an associate for a UK based global business school included “Issues in International Finance and Investments”,” Corporate Finance” and “Issues in IFRS”. His industry experience is over 20 years working for asset managers, investment banks, global custodians in the UK, Luxembourg and Belgium. He received a universities award for innovation in finance teaching and learning.  

Dr. Johannes Hofinger, MBA, FRM

Dr. Johannes Hofinger is specialized in Risk Management, Basel III, IFRS and regulatory reporting. His professional skills are reinforced by strong academic roots. He lectures for global business schools in corporate finance, managerial accounting and financial reporting. The main roles undertaken are lecturing, consulting and project management.  

Unsere Internationale Erfahrung
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Bücher, die wir für Sie studiert haben

A Theory of the Firm's Cost of Capital - Ramesh K S Rao
A Theory of the Firm's Cost of Capital - Ramesh K S Rao

The cost of capital concept has myriad applications in business decision-making. The standard methodology for deriving cost of capital estimates is based on the seminal Modigliani-Miller analyses. This book generalizes this framework to include non-debt tax shields (e.g., depreciation), interactions between the borrowing rate and tax shields, and default considerations. It develops several new results and shows how better cost of capital and marginal tax rate estimates can be generated. The book's unified cost of capital theory is discussed with comprehensive numerical examples and graphical illustrations.This book will be of interest to corporate managers, academics, investment bankers, governmental agencies, and private companies that generate cost of capital estimates for public consumption.  

Cost of Capital: Applications and Examples - Shannon P. Pratt, Roger J. Grabowski
Cost of Capital: Applications and Examples - Shannon P. Pratt, Roger J. Grabowski

"Completely revised for this highly anticipated fifth edition, Cost of Capital contains expanded materials on estimating the basic building blocks of the cost of equity capital, the risk-free rate, and equity risk premium. There is also discussion of the volatility created by the financial crisis in 2008, the subsequent recession and uncertain recovery, and how those events have fundamentally changed how we need to interpret the inputs to the models we use to develop these estimates.  

The Cost of Capital - Eva Porras Gonzalez
The Cost of Capital - Eva Porras Gonzalez

The relationship between risk, return and the cost of capital is contextualized by relating it to the needs of investors and borrowers, the historical evidence, and theories of choice and behavior. The text spans financial theory, its empirical tests and applications to real-world financial problems while keeping an entertaining easy-to-read style.  

Unternehmen, die bereits unsere Kurse besucht haben


AG Insurance
Allianz Benelux
Argenta NV
AXA Belgium
Baloise Insurance
Banca Monte Paschi Belgio S.A.
Bank De Groof
Banking Association (Kosovo)
Belfius Investment Partners
BNP Paribas Fortis
Bpost Bank
Buy Way
CBC Bank
Celio Finance SPRL
Delen Private Bank
Delta Lloyd Life
Deutsche Bank AG
DKV Belgium
Ethias SA
Euler Hermes Services
Euroclear Bank SA/NV
Euroclear Investments
Europ Assistance
European Investment Bank - EIB (Luxembourg)
European Union - EDFIMC / ElectriFI
Flanders Investment & Trade
Gras Savoye Belgium
Incofin Investment Management
ING Bank België
KBC Bank
Ministry of European Integration (Kosovo)
National Bank of Belgium
NN Insurance Belgium
Record Bank
Société Générale Private Banking
The Royal Bank of Scotland (RBS)
Triodos Bank
VGD International -Audit & Tax
Wolters Kluwer Financial Services
Zurich Insurance plc, Belgium branch
Vanbreda International
Afton Chemical SPRL
Air Liquide
Allnex Belgium SA/NV
ANL Plastics
Arcelor Mittal ( Belgium & Luxembourg)
Axalta Coating Systems 
BASF Antwerpen
BASF Belgium Coordination Center
Beaulieu International Group
Borealis Polymers NV
Bridgestone Europe SA
CNH Industrial Belgium NV
Cofely Fabricom
Cytec Belgium
DOMO Chemicals (Germany)
Dow Corning
Electrolux Appliances AB - EMA- EMEA (SEE)
Engineered Pressure Systems International
European Owens Corning Fiberglas
Fost Plus
GDF Suez
Griffith Foods
Hamon & Cie
Heraeus Electro-Nite International NV
Jacobs Belgium
Milliken Europe
Niko Group
NXP Semiconductors - Prodis  (Netherlands)
SPX Cooling Technologies
Synventive Molding Solutions (Germany)
Vinçotte International
VPK Packaging Group NV
Yara Belgium NV
Antwerp World Diamond Centre
AVEVE Biochem NV
Carrefour Belgium
Delhaize Corporate Group
Abbott Logistics B.V. (Netherlands)
AbbVie (Canada)
Agfa HealthCare NV
AZ Sint-Blasius
Baxter International (Austria)
Catalent Pharma Solutions
CinnaGen (Tehran)
Datwyler Pharma Packaging International
Groep OZ ESV
Landelijke Christelijke mutualiteit (LCM)
Mutualités Libres: MLOZ
Novartis Pharma
SA Bristol- Myers Squibb Belgium NV
Stryker (Netherlands)
Terumo BCT Europe NV
Zorgbedrijf Antwerpen
AW Europe
Belgian Nuclear Research Centre (SCK-CEN)
Corelio Printing
De Persgroep Publishing nv
EDF Luminus
Elia System Operator
Engie Electrabel NV/SA
Eni Gas & power
Fluxys Belgium
Itineris NV
Agentschap Innoveren en Ondernemen
Europees Parlement
Ministry of European Integration
National Agency for Protection of Personal Data
Nationale Loterij
SD Diensten NV (SD Worx)
SESAR Joint Undertaking
Stad Antwerpen
Stadsbestuur Harelbeke
Syntra Brussel
UGent - FBW
Vrije Universiteit Brussel (VUB)
Acturus sprl
ARC Europe
BIA Africa
Bia Overseas
Brooser BE Operations 
Cipal Schaubroeck
Computer Task Group
Deloitte Accountancy
Egemin International
Enhesa International
FIS (former Clear2Pay)
Interel Group
K&L Gates
Matexi NV
Pricewaterhouse Coopers
PwC Tax Consultants
Vinçotte International sa
Alstom Belgium
ARC Europe 
Brussels Airport Company
De Lijn
D'Ieteren Auto
Gemeentelijk Havenbedrijf Antwerpen
Globachem nv
GSC Greensea Chartering 
HONDA Motor Logistics
Neovia Logistics
PSA Antwerp nv
Retail & Wholesale
Seatrade Reefer Chartering
Thalys International
Trimble T&L
Volkswagen Group Services
Wallenius Wilhelmsen Logistics Zeebrugge NV
Witzenmann Benelux nv

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 Kris De Clercq
- Telefon: +32 496 43 94 00
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