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Question -
a) A friend is trying to determine their company's weighted average cost of capital but is really not sure how to do this. You have been advised that the cost of ordinary equity is 14%, preference shares are 9% and pre-tax cost of debt is 5%. The weight of preference shares is 15% and ordinary shares are 60%. The tax rate is 27.5%. Calculate the after tax Weighted Average Cost of Capital (WACC).
b) Your cousin has advised you that the Debt-to-Equity Ratio (total debt to total equity) is 2 and that of his equity he has 60% ordinary shares. Determine the weight of debt, ordinary equity and preference equity to be used in the calculation of the after tax WACC.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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