Chapter 13
Risk Analysis

Chapter Learning Objectives

The learning objectives of the chapter are:

• Guiding the learners on how to calculate the cost of capital.
• Explaining the weighted average cost of capital (WACC).

Learning Outcome

At the end of chapter the participants will be able to calculate the cost of capital for an enterprise. Financial managers need a cost of capital to use in decision making. At the end of this chapter the learners will be to make decisions on how to finance an enterprise, considering the costs of all sources of finance.

Learning Activities

Individual Activities

• The participant to give a brief statement of their past experience and knowledge of financial institutions in Malawi.

Group Activities

• Attending a session by a renowned Malawian banker on the development of financial intuitions in Malawi.

Sessions and Time Allocated

8. Cost of capital: 1 hour
9. Capital Asset Pricing Model (CAPM): 1 hour
10. Capital structure and WACC: 1 hour