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Chinese Enterprises Cost Of Capital To Determine The Methods Of Research

Posted on:2003-01-06Degree:MasterType:Thesis
Country:ChinaCandidate:Z GuoFull Text:PDF
Abstract/Summary:PDF Full Text Request
The paper is aimed to find out a way to determine the capital cost of the enterprises of our country. By now, the research on it in our country is quite weak. The theories on capital cost are based on the theory that capital cost is the compensation of the risk of system. Among them, the representative theory is capital assets pricing model. However, it needs some prerequisites to use the model. The paper first checks whether China has the prerequisites by empirical analysis. The results of empirical analysis show that our country hasn't had the conditions to use CAPM model.Since the CAPM model can't be used, the paper then tries to determine capital cost by find out an appropriate index to measure the risk of system of our country. The index is the long-term average return of the investment in a trade, for the risk of system mainly comes from the environment of the trade. But because of the reasons referred in the paper, the way is also given up.Under the circumstances, the author puts forwards a series of methods to determine the capital cost of equity of our country's enterprises by analyzing the different pressure of different enterprises to reward their investors because of their different structures of administration based on the original definition of capital cost. Such method matches with our country's reality. And it can explain some special financial phenomena in our country. Although the method has some weakness, it is the most satisfying way to determine the capital cost in the economic stage of our country today.Besides capital cost of equity, another aim of the paper is to determine capital cost of debt of our country's enterprises, in the part of it, the paper emphasize on the problems on debt financing of our enterprises and puts forward some suggestions to solve them. The formula to calculate capital cost of debt is quite easy.
Keywords/Search Tags:capital cost, capital cost of equity, capital cost of debt
PDF Full Text Request
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