Weighted average cost of capital for use capital budgeting

Assignment Help Financial Management
Reference no: EM13877745

Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting?

Common stock raised by new issues.

Accounts payable.

Common stock “raised” by reinvesting earnings.

Preferred stock.

Long-term debt.

Reference no: EM13877745

Questions Cloud

When used as evidence-what does an effective example do : When used as evidence, what does an effective example do?
What is the value of a bond that has a par value : What is the value of a bond that has a par value of $1,000, a coupon rate of 8.26 (paid annually), and that matures in 30 years? Assume required rate of return on this bond is 8.65 percent
The two most basic components of any investment opportunity : The two most basic components of any investment opportunity are risk and return. Define each and explain how they are related in the investment world. Why does their relationship matter to you as an investor?
The corporate valuation model discounts free cash flows : The corporate valuation model discounts free cash flows by the required return on equity. The corporate valuation model can be used to find the value of a division. An important step in applying the corporate valuation model is forecasting the firm's..
Weighted average cost of capital for use capital budgeting : Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting?
Calculate the times interest earned ratio : Calculate the times interest earned ratio for Tierre's Ts, Inc. using the following information. Sales = $200,000, cost of goods sold = $50,000, depreciation expense = $13,000, addition to retained earnings = $70,000, dividends per share = $0.50, tax..
Transactions occurred in the primary market : Which one of the following transactions occurred in the primary market?
What would the investor be willing to pay for the loan : A borrower has secured a 30 year, $150,000 fully amortizing fixed rate loan at 7% with monthly payments. Fifteen years later, an investor wants to purchase the loan from the lender. If market interest rates are 5%, what would the investor be willing ..
Retained earnings break point for marginal cost of capital : Rolodex Inc. Balance Sheet (in millions) shows retained earnings of $110 and $20 Common Stock (20 million shares at par). Rolodex expects to generate $140 million in net income and pay $2 per share in dividends. What is Retained Earnings for the purp..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the amount of net fixed assets

Pearce’s has a long-term debt ratio of .45 and a current ratio of 1.25. Current liabilities are $875, sales are $5,780, profit margin is 9.5%, and ROE is 18.5%. What is the amount of net fixed assets?

  What was cost of goods sold for the year

X Company, a manufacturer, reported the following inventory balance for 2012: What was Cost of goods sold for the year?

  What is the companys cost of equity

The Down and Out Co. just issued a dividend of $2.46 per share on its common stock. The company is expected to maintain a constant 4 percent growth rate in its dividends indefinitely. If the stock sells for $30 a share, what is the company's cost of ..

  What is a sensitivity analysis how would you use it in

what is a sensitivity analysis? how would you use it in planning for future expansions? what role does this kind of

  The project has the same risk level as the company

Texas Chemicals is a major producer of oil-based fertilisers in the US. The company’s stock is currently selling for $80 per share and there are 10 million shares outstanding. The company also has debt outstanding with a market value of $400 million...

  What is the weighted average cost of capital for corporation

What is the weighted average cost of capital for corporations that finance an expansion project using 30% retained earnings and 70% venture capital. Assume the interest rates are 8% for the equity financing and 13% for the debt financing.

  Discuss some of the pros and cons of using debt

Discuss some of the pros and cons of using debt as a long-term source of capital funding for a company. Why does using an appropriate amount of debt increase the value of the firm"

  Executive roles of management-planning-organizing-leading

How does the concept of the time value of money affect decisions made across the four executive roles of management -- planning, organizing, leading, and controlling? Why is this concept important for the contemporary executive to understand?

  Examine the degree of strategy linkage

Ensure best resources allocations regarding to the quantity and competences and ensure that all undertake projects are alignment to organization strategy and examine the degree of strategy linkage.

  Rate of return on stock using capital asset pricing model

Given the following data for a stock: beta = 1; risk-free rate = 4%; market premium = 6%. Calculate the expected rate of return on this stock using the capital asset pricing model.

  Delay in integrating the acquired business

Delay in integrating the acquired business can contribute to which of the following?

  What is their operating cycle and cash conversion cycle

Camp Manufacturing currently has average inventories of 90 days and accounts receivable are typically collected in 60 days. Camp’s payables are paid 30 days after the invoice is received. The company has sales of $30,000,000. Using a 365 day year, Wh..

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