Illustrate what course of action should organization take

Assignment Help Operation Research

Reference no: EM13107092

Q. An organization's current balance sheet is as follows:
Assets $100 Debt $10
Equity $90

1.Illustrate what is the organization's weighted-average cost of capital at various combinations of debt and equity, given the following information?
Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital
0% 8% 12% 12
10 8 12 11.6
20 8 12 11.2
30 8 13 11.5
40 9 14 12
50 10 15 12.5
60 12 16 13.6

2. Construct a pro forma balance sheet that indicates the organization's optimal capital structure. Compare this balance sheet with the organization's current balance sheet. Illustrate what course of action should the organization take?

3. Explain how do I start a pro forma balance sheet? Do I just pick an amount for debit and equity that will equal 100? If so, Explain how do I do start an optimal capital structure?

Reference no: EM13107092

Questions Cloud

Illustrate what communication channels would be appropriate : Illustrate what communication channels would be appropriate and explain why? Illustrate what are some considerations that you must keep in mind given the diversity of the audience?

Question about one sample t test : A researcher claims that the average age of people who buy lottery tickets is 64. A sample of 30 is selected and their ages are recorded as shown below.

Explain varying social systems and ideas of larger society : Explain the varying social systems and ideas which connected individuals with larger society in each of three "cultural eras" which we have studied this semester.

How business strategy affect internal alignment policies : How might a company's business strategy affect the internal alignment policies and techniques of its Total Compensation system?

Illustrate what course of action should organization take : Construct a pro forma balance sheet that indicates the organization's optimal capital structure. Compare this balance sheet with the organization's current balance sheet. Illustrate what course of action should the organization take?

Find the difference in final speeds of the two spheres : Two metal spheres, each of mass 14 g and initially at rest, are dropped from a height of 6 m in an evacuated chamber. One sphere has a charge of +50 ?C, and the other has a charge -50 C.

Explain why do you think it would not be cost effective : Explain why do you think it would not be cost effective to just perform a zero-based budget analysis in a single year? Illustrate what kinds of costs are involved in this analysis?

Find the minimum stopping distance : It takes a minimum distance of 48.96 m to stop a car moving at 12.0 m/s by applying the brakes (without locking the wheels). Assume that the same frictional forces apply and find the minimum stopping distance when the car is moving at 26.0 m/s.

Calculate the acceleration of the car at that time : A car of mass 920.0 kg accelerates away from an intersection on a horizontal road. When the car speed is 41.0 km/hr (11.4 m/s), the net power which the engine supplies is 4300.0 W (in addition to the extra power required to make up for air resista..

User Account

All Pages