What is the primary purpose of calculating the cost of capital for a firm?

To evaluate investment opportunities

What is the WACC (Weighted Average Cost of Capital) used for?

To assess the average cost of financing a firm's assets

To analyze customer demographic data

To calculate the total revenue of a company

To determine the profit margins of products

How does increasing debt in a company's capital structure typically affect its overall cost of capital?

It may lower the overall cost of capital initially

It has no effect on the overall cost of capital

It always increases the overall cost of capital

It makes the overall cost of capital unpredictable

What is the significance of the cost of equity in a firm's capital structure?

It reflects the return required by shareholders

It determines the company's market share

It is used to calculate employee wages

It measures production efficiency

What effect does a higher risk of a business typically have on its cost of capital?

It increases the cost of capital

It decreases the cost of capital

It makes the cost of capital fixed

It has no effect on the cost of capital

Which formula is commonly used to calculate the cost of equity?

CAPM (Capital Asset Pricing Model)

DOL (Degree of Operating Leverage)

P/E Ratio (Price to Earnings Ratio)

What is the primary advantage of using debt in a company's capital structure?

Interest on debt is tax-deductible

Debt has lower risk than equity

Debt does not require repayment

Debt increases company ownership

What is the primary role of the cost of capital in investment decision-making?

To benchmark the minimum acceptable return on investments

To determine the price of shares

How does a firm's capital structure impact its financial risk?

A higher proportion of debt increases financial risk

A balanced capital structure reduces financial risk

It has no effect on financial risk

A higher proportion of equity increases financial risk

Cost of capital and capital structure

Stages in the Sale of a Property Stage 1 – Getting to Instruction • Initial contact with the vendor: need to check the following: type of property, contact details of vendor, address of property/Eircode and purpose of the contact - sale or valuation? If a sale, does the vendor need a quick sale? Qualify the lead i.e. is the vendor buying another property? If an investment property, is the tenant in situ? Check if there is a folio number available and confirm the ownership of the property. Schedule the viewing. • Pre-viewing: Set up a file & record all info from initial contact on CRM system. Check the Property Price Register to help get a general idea of property valuation (subject to viewing, helps to display knowledge of area/market and set expectations for the vendor). Nature of property may affect pricing e.g. starter home vs. larger property with vendor seeking to downsize. Consideration for comparables may include similar/same location, size and condition of property, availability and type of parking, layout of property, plot size, orientation of garden, extensions undertaken etc. Nature of market conditions, state of wider economy, cost of capital and availability of credit may also be factors. • Appraisal/viewing: Bring an advertising pack/sales & marketing brochures. Walk through property with client, note nice features/selling points for the brochure, let the client talk about upgrades/specific features of the property. It is very important to listen to the vendor and build rapport. Confirm property details e.g. condition and layout, plot size, orientation of garden. Check for certificates of compliance for any extensions, planning permissions for conversions, right of way if applicable etc. Check if a BER available/provide details for approved assessors. Demonstrate your/the practice’s professional expertise, justify why you should get the instruction, discuss recent local sales and give your potential valuation. Discuss the sales fee, marketing fee and any additional charges e.g. professional photography, drone footage, virtual tours (walkthrough video, Matterport etc.) Ask how the vendor heard about you/your practice and why are they considering you for the sale. Where appropriate offer advice to help vendor increase potential sales price. (If possible, leave with signed Property Services Agreement/Letter of Engagement.) Thank you, send/email market appraisal, any queries/questions do get in touch and let the vendor know that we’ll be in touch in coming days. • Post appraisal – letter sent that pm/next morning with market appraisal; diary note to follow up. Check that market appraisal letter received and check for questions. If did not get sale, find out why not/debrief. If get the sale, email confirmation of instruction. Once PSRA sent and LOE returned signed = stage 2. Other details required – ID, proof of address, proof of ownership/title, solicitor details, BER certificate (refer to assessor if not available). All these should be uploaded to CRM. Stage 2 – Getting to ‘Sale Agreed’ Set up appointment to measure & photograph, note any special features e.g., upgraded kitchen, south-facing garden. Provide ideas for improving sales potential (declutter, painting, tidy garden etc. Check if has vendor potential buyers in mind already e.g., relations, friends, other parties interested. Seek vendor approval for photos/text of brochure. Check for access (tenants in situ/working from home etc) and confirm viewing times. If given a key for viewings – tag it! Check alarm codes & whether a sign is allowed on the property. Bring to market – upload to all websites e.g., daft/my home, in house websites and create window display. Match the property against your internal database of potential purchasers /CRM system. Set up appointments for viewings on CRM or arrange for open viewings. Confirm viewings with vendor & purchaser. Turn on lights, open windows, secure valuables, leave out brochures & business cards, bring viewings sheets to keep record of attendees. Introduce yourself and get attendee details. Let people view the property and address any questions. Point out key features. Record questions to be answered and any feedback from viewers. Ask are they selling property? Let viewers know of offers already received. Lock up/alarm property/close windows. Provide vendor with feedback on viewings - number of viewers / questions raised/overall reaction to property. Offers should be confirmed in writing & upload to on CRM/ offers will be input by bidders onto online bidding platforms ‘Proof of funds’ required for offers in some practices. Successful bidder will be chosen by vendor, who might want quick sale/no chain or prefer the highest bidder. Booking deposit will be sought from successful bidder. The amount varies by practice but must cover fees. Sales Advice Notice/letter should be sent to both solicitors (and may be cc’d to vendor/buyer or notify both that SAN have gone out). Booking deposit receipt should be issued. The BER certificate and report should go to the solicitor. Send requests for docs/info to successful bidder including steps they need to take to progress sale e.g., organise the bank valuation and/or schedule the survey. Once the deposit is paid the property is Sale Agreed, inform other bidders, and update all websites/sales board etc. Stage 3 – Getting to closing Access should be organised for the bank valuation/survey. Stay in touch with both solicitors ‘contract-chasing’ i.e., check when contracts are issued, signed and queries answered. Legal searches undertaken by the solicitors may include checking boundaries, land registry, title, rights of way, compliance certs etc. When contracts are signed 10% purchase price/booking deposit should be sent to the vendor’s solicitor. Once all queries satisfied = drawdown of mortgage/funding, house/life insurance in place. Title deeds will be requested once contract is signed. Decide final closing date. Check that the property taxes have been paid. Check that vendor has vacated the property. When vacant, conduct the final walkthrough and take final readings (MPRNs ). Check with solicitor if the drawn down funds h, and once received the solicitor gives authorisation to the estate agent to release the keys. The agent will do up invoice, send the balance of funds to solicitor and provide gift to purchaser. Finally remove sign, mark as sold on CRM, seek testimonials, upload to social media and close a/c on CRM

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