User Account

All Pages

Imagine you are the cfo of ibm you have been successful

Assignment Help Finance Basics
Reference no: EM13483545

Imagine you are the CFO of IBM. You have been successful over the years, but are now concerned about how many sources of funds you have, and the cost of those funds. With changing business conditions, you really want to keep these costs down.

At IBM, you have issued $100,000,000 in Corporate Bonds that carry a 6% interest rate, $200,000,000 in Equity that offers a 10% dividend, and $100,000,000 in Retained Earnings that has an opportunity cost of 9%.

a. What is your weighted average cost of capital? (Calculate, and show the work)

b. What could this business do to bring this cost down? Discuss, using specific examples.

c. Why is knowing WACC important for a business?

Reference no: EM13483545

Questions Cloud

Monroe inc is evaluating a project the company uses a 138 : 1.quick sale real estate company is planning to invest in a new development. the cost of the project will be 23 million
The company has some unused equipment that it currently : sailcloth amp more currently produces boat sails and is considering expanding its operations to include awnings for
Ashley has received a large inheritance from her : ashley has received a large inheritance from her grandmother and wants to put aside enough money to pay for her childs
The loan of 15 000 is being repaid by 10 monthly : the loan of 15 000 is being repaid by 10 monthly installments with the first 5 payments of x and the last 5 payments of
Imagine you are the cfo of ibm you have been successful : imagine you are the cfo of ibm. you have been successful over the years but are now concerned about how many sources of
The bank receives interest on the loan at 10 convertible : mr.jones borrows 25 000 from bank b for 10 years. he makes semiannual payments of 2 000. the bank receives interest on
How do you use degree of operating leverage to determine : pampq company has provided you the following information. monthly fixed expenses are 5000 usd and variable expenses per
Suppose that microsoft is considering changing its capital : suppose that microsoft is considering changing its capital structure in light of the tough business environment.
A loan is being repaid by 15 annual installments of 1 000 : a loan is being repaid by 15 annual installments of 1 000 each. interest is at an effective rate of 5. immediately

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the dealer''s expected carry income

Compute the dealer's expected carry income - Based on the above results, is it always good for the dealer when interest rates rise? How about when they fall? Please explain.

  What is the expected capital gains yield

The next dividend payment by Wyatt, Inc., will be $3.40 per share. The dividends are anticipated to maintain a growth rate of 7.75 percent, forever. Assume the stock currently sells for $50.40 per share.

  The following ratios are available for bachus inc and

the following ratios are available for bachus inc. and newton inc.currentratiodebt toassets ratioearningsper

  What is the service rate

Using Sally's estimate of demand that follows, how many T-shirts should she produce for the upcoming event?

  What is the rational for wealth maximization as a goal for

1. what is the rational for wealth maximization as a goal for a firm?2. what are the key financial statements and why

  Pick an annual report company of your choice that has

pick an annual report company of your choice that has operating leases footnote and convert operating leases to capital

  Determine the unit and dollar amounts of raw materials

Determine the unit and dollar amounts of raw materials inventory in heels at December 31, 2011.

  In this discussion you will evaluate a research question

in this discussion you will evaluate a research question and determine how that question might best be analyzed.nbsp to

  The target capital structure of qm industries is 40 common

the target capital structure of qm industries is 40 common stock 9 preferred stock and 51 debt. if the costs of common

  Find the investment amount

Mark wants to buy a new car in three years. The car is expected to cost 80,000 in 3 years. If Mark can find an investment yielding 12% over the three year period,

  Computation of cost of equity using constant growth rate

Computation of cost of equity using constant growth rate and The constant growth rate dividend capitalization model approach

  Cross-rates and arbitrage the japanese yen exchange rate is

cross-rates and arbitrage the japanese yen exchange rate is yen961 and the british pound exchange rate is pound11.72.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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