Second Edition of Cost of Capital

This workbook is designed as a hands-on practical learning experience to supplement the book Cost of Capital: Estimation and Applications. It is Ihoroughly indexed to also serve as a reference tool for any specific aspect of cost of capital.

The workbook covers every major concept presented in the second edition of Cost of Cap­ital. The second edition follows trie same chapter order as the first edition but covers additional material and updated material not found in the first edition.

The workbook is organized in two sections:

Section One:   Questions Section Two: Answers

The questions in Section One consist of:

Multiple Choice Questions

True or False Questions

Fili-in-the-blank Questions

Exercises

The workbook contains an exercise illustrating every computational concept presented in the book.

The answers in Section Two are supplemented by explanations where some amplification would be helpful to the reader.

Readers who use the workbook in conjunction with Cost of Capital may choose to work the chapters in the workbook immediately after reading each corresponding chapter in Hie book, or they may choose to read Cost of Capital in its entirety before starting the workbook. Alternatively, readers may work Parts 1, it and 3.11 of the workbook after reading each corresponding pail in the book.

For definitions of terms, readers should turn to the International Glossary of Business Val­uation Terms, included in the workbook as an appendix.

For those interested in earning Continuing Professional Education (CPE) credit. Section Two is followed by a 40-question self-study quiz good for eight (8) hours of CPE credit.

The workbook also will serve as a use3:'ul tool tor students preparing to sit for professional exams offered by the American Society of Appraisers (ASA), which awards the Accredited Se­nior Appraiser designation; the American Institute of Certified Public Accountants (AT.CPA), which awards the Accredited in Business Valuation designation; the Institute of Business Ap­praisers (IBA), which awards the Certified Business Appraiser designation; the National As­sociation of Certified Valuation Analysts (NACVA), which awards the Certified Valuation Analyst designation; the Canadian Institute of Chartered Business Valuators (CICBV), which awards the Chartered Business Valuator designation; and the Association for Investment Man­agement and Research (ATMR®), which awards the Chartered Financial Analyst® designation.

This workbook has benefited enormously from review by several people with an advanced level of knowledge and experience in cost of capital and valuation. The following people re­viewed the manuscript, and the workbook reflects their thoughtful consideration and comments:

Michael W. Barad Ibbotson Associates Chicago, HI.

Stephen J. Bravo

Apogee .Business Valuations, inc.

Framingham, Mass.

James R, Ilitchner

Phillips Hitcbner Group, inc.

Atlanta, Ga.

Ronald L. Seigneur

Seigneur & Company, P.C, CPAs

Lakewood, Colo.

In addition, I would like to thank two analysts of Willamette Management Associates who worked through all of the questions and critiqued the workbook. Their comments provided us with helpful feedback. They are:

Aaron Rotkowski Portland, Ore.

Tlya Shulman Chicago, 111,

T especially thank Alina Niculita for wri ting Chapters 7, 8, 9, 10, 1 1, and 13, and for creat­ing the index. Her significant contribution is greatly appreciated. A note of tlianks, also, to BVMarketData.corriF0- manager Chad Phillips, CFA, of Business Valuation Resources, who contributed to Chapter 12 and also reviewed the manuscript.

A special thanks to Ibbotson Associates, whose data we relied on heavily in writing this workbook and whose unique perspective and suggestions proved invaluable.

T aii) very grateful for the continuing support from John Wiley & Sons, Inc., especially John DeRemigis, executive editor, Judy Ilowarth, associate editor, and Louise Jacob, associate man­aging editor.

Finally, to Tanya Hanson, project manager on this workbook, research analyst Jill Johnson, and publications department assistant Laurie Morrisey, all with Business Valuation Resources, 1 would like to express my thanks and appreciation for their superlative efforts.

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