Distinction between firms weighted average cost of capital

Assignment Help Financial Management
Reference no: EM13915219

Explain the distinction between the firm’s weighted average cost of capital (WACC) and its weighted marginal cost of capital (WMCC)? Are the calculations of the WACC and the WMCC different? Explain.  

Reference no: EM13915219

Questions Cloud

Common stock of the company : the common stock of the company is owned by many diverse shareholders
Weighted average cost of capital considered hurdle rate : Why is the firm’s weighted average cost of capital (WACC) considered a “hurdle rate”? Explain how the use of book value weights taken from the balance sheet might render the calculation of a firm’s WACC unreliable.
Prepare journal entries for these transactions : Western Corporation received a charter that authorized the issuance of 100,000 shares of $10  par common stock and 50,000 shares of $50 par, 5 percent cumulative preferred stock.
Explain what devon meant and give examples of transactions : Chris, Patty, and Devon, three accounting students, were discussing the rules of debits and credits. Chris says that debits increase account balances and credits decrease account balances. Patty says that Chris is wrong, that credits increase account..
Distinction between firms weighted average cost of capital : Explain the distinction between the firm’s weighted average cost of capital (WACC) and its weighted marginal cost of capital (WMCC)? Are the calculations of the WACC and the WMCC different? Explain.
Cost is relevant for establishing a minimum selling price : Assume the company has 500 units of this product left over from last year that are inferior to the current model. The units must be sold through regular channels at reduced prices. What unit cost is relevant for establishing a minimum selling price f..
The capital-gains yield on the stock : An investor earns dividends of $450 during the course of the year. At the end of the year, the stock is worth $10,700. The capital-gains yield on the stock was 8 percent. At the beginning of the year, the stock was worth?
Arithmetic average return on crash-n-burns stock : You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 15 percent, –6 percent, 18 percent, 14 percent, and 10 percent. What was the arithmetic average return on Crash-n-Burn’s stock over this five-year period..
Explain the characteristics of a virtual server : Explain the characteristics of a virtual server infrastructure. Describe the difference between physical server and virtual server environments.Describe the various types of cloud-based architectures: SaaS, IaaS, PaaS.

Reviews

Write a Review

Financial Management Questions & Answers

  Statements about opportunity costs

Which of the following statements about opportunity costs is incorrect?

  What is cash value of this annuity due at the end of year

At the beginning of each period for 10 years, Merl Agnes invests $500 semi annually at 6%. What is the cash value of this annuity due at the end of year 10?

  Calculate the EAC for each machine

Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,084,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $225,000 per year. Calculate the EAC for..

  Different capital structures-an all-equity plan-levered plan

BNB Bank is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the bank would have 800,000 shares of stock outstanding.

  Determine the actual t-bill rate and inflation rate

The real rate of return is 3 percent. If inflation is expected to be 4 percent, what should be the risk free rate of return? What is the risk free rate of return if inflation is 2 percent? If the T-bill rate is 3 percent and inflation is 4 percent, w..

  Manufactures time series photographic equipment

Photo light Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt/equity ratio of 0.60. It's considering building a new manufacturing facility. The facility costs $40 million now to build. This new plant..

  Standard deviation of the investors portfolio

Assume the annual average return on the S&P500 is 13.7% with a standard deviation of 17.5%. A risk-free asset has an annual average return of 4.0% with a standard deviation of 0.0% and a correlation with the S&P500 index of +0.00. An investor invests..

  1 identify and explain three types of start ups firms give

1 identify and explain three types of start ups firms. give a illustration of one you have dealt with.2 what is a

  What annually compounded interest rate

Trent receives a check for $20,000 from his parents for his 20th birthday. He decides to deposit this money into an account earning a 9% interest rate compounded monthly, forever.

  First payment to provide the perpetuity payments

A perpetuity is to pay $500 on the first of each month from January through September, inclusive. No payments will be made in October, November, or December. This pattern of payments is to continue forever. Assuming the monthly effective interest rat..

  Amortization schedule

Set up an amortization schedule for a $42,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 6% compounded annually. Round all answers to the nearest cent. What percentage of the payment represent..

  Portfolio consisting of risk free asset and market portfolio

Assume the market has a Treynor Index of 4.00%. What is the treynor index of your portfolio consisting of the risk free asset and the market portfolio weight on the market is 17% (and the balance is in the risk free security)? the Treynor Index of yo..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd