What is the universitys cost of capital

Assignment Help Business Economics

Reference no: EM13773045

A public university wants to apply the concept of the WACC to developing its interest rate for analyzing capital projects. It has an endowment of $68 million which is earning 6.3% interest. It is paying 4.5% interest on $29 million in bonds. It believes that $94 million in general funds from the taxpayers should be assigned an interest rate of 13%. What is the university’s cost of capital? Note that only the interest on the endowment is available to fund capital projects.

Reference no: EM13773045

Questions Cloud

State with no state income taxes : Your company headquarters is within the United States in a state with no state income taxes. The company does before tax analysis using a MARR of 14.84%. The company expects its revenue in the current year to be $18,500,000. You are asked to do an af..

The population growing, declining or stable : Is the population growing, declining or stable? What is the projected population?

Corporations marginal tax rate : A corporation's marginal tax rate is 34 %. An outlay of $35,000 is being considered for a new asset. Estimated annual receipts are $20,000 and annual disbursements are $9,000. The useful life of the asset is 5 years, and it has no salvage value. Assu..

Describe the optimum room design for investigation : Describe the optimum room design for conducting this investigation. In preparation for these interviews and interrogations create a table of General Questions and Specific Questions to ask the witnesses and/or suspects. Analyze each question and prov..

What is the universitys cost of capital : A public university wants to apply the concept of the WACC to developing its interest rate for analyzing capital projects. It has an endowment of $68 million which is earning 6.3% interest. It is paying 4.5% interest on $29 million in bonds. It belie..

Financial statements used to develop the financial plan : Identify the GAAP used to create the financial plan. Identify the financial statements used to develop the financial plan.

Calculate book value-further expected to have salvage value : And asset will cost $1,989 when purchased this year. It is further expected to have a salvage value of $243 at the end of its 9-year depreciable life. Calculate the book value at the end of year 2 using method #2. Provide the answer with two decimal ..

How might the author respond to the critique : How might the author respond to this critique? What could he say that might save his position? Could he argue that you misunderstood his view?

Pollution in the air, soils, and surface water : Discuss any two environmental concerns of having mercury pollution in the air, soils, and surface water.

User Account

All Pages