Corporate Finance Spring 2025 Session 17: Optimizing the Debt Mix with Cost of Capital approach
Session 17: Optimizing the Debt Mix with Cost of Capital approach Transcript and Lesson Notes
We started this class by looking at how the cost of capital can be used to optimize the right mix of debt and equity. In effect, you estimate the costs of debt and equity at different debt ratios, and try to find the mix
Quick Summary
We started this class by looking at how the cost of capital can be used to optimize the right mix of debt and equity. In effect, you estimate the costs of debt and equity at different debt ratios, and try to find the mix
Key Takeaways
- Review the core idea: We started this class by looking at how the cost of capital can be used to optimize the right mix of debt and equity. In effect, you estimate the costs of debt and equity at different debt ratios, and try to find the mix
- Understand how Corporate fits into Session 17: Optimizing the Debt Mix with Cost of Capital approach.
- Understand how Finance fits into Session 17: Optimizing the Debt Mix with Cost of Capital approach.
Key Concepts
Full Transcript
We started this class by looking at how the cost of capital can be used to optimize the right mix of debt and equity. In effect, you estimate the costs of debt and equity at different debt ratios, and try to find the mix of debt and equity that minimizes your cost of capital. If you want to try your hand at using the spreadsheet to optimize debt ratio, try the following: http://www.stern.nyu.edu/~adamodar/pc/capstru.xlsx We will continue with this discussion next class. looking at limits to the approach, and variants Slides: https://nyu.box.com/s/bdtnk9929ndg1244jtocavcy7tara86m Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17test.pdf Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17soln.pdf
Lesson FAQs
What is Session 17: Optimizing the Debt Mix with Cost of Capital approach about?
We started this class by looking at how the cost of capital can be used to optimize the right mix of debt and equity. In effect, you estimate the costs of debt and equity at different debt ratios, and try to find the mix
What key concepts are covered in this lesson?
The lesson covers Corporate, Finance.
What should I learn before Session 17: Optimizing the Debt Mix with Cost of Capital approach?
Review the previous lessons in Corporate Finance Spring 2025, then use the transcript and key concepts on this page to fill any gaps.
How can I practice after this lesson?
Practice by applying the main concepts: Corporate, Finance.
Does this lesson include a transcript?
Yes. The full transcript is visible on this page in indexable HTML sections.
Is this lesson free?
Yes. CourseHive lessons and courses are available to learn online for free.
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