1. Why is the WACC used in capital budgeting?
2. Explain the various approaches that are used to estimate the cost of common equity.
3. Explain at least one factor that affects the cost of capital and describe whether or not is is something that a company can control.
4. Provide and summarize a real world example of a publicly traded firm issuing or redeeming capital. What reasons were given for the decision and how does it appear to effect their overall cost of capital?
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Capital xxxxxxxxx is xxx xxxxxxx xx xxxxxxxxxx proposed investment xxxxxxxx for a firm. Therefore by using xxxxx xxx are xxxx to determine the discount xxxx xxx xxxxxxxxxx xxxxxxxx the xxxx might xxxxxxxxx and it is also the xxxxxxxxxxx rate to use xxxx evaluating
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1. xxx xx the xxxx xxxx xx capital xxxxxxxxxx
xxxxxxx xxxxxxxxx xx the xxxxxxx xx evaluating xxxxxxxx investment xxxxxxxx for x firm. Therefore xx using WACC, xxx are able xx xxxxxxxxx xxx xxxxxxxx rate xxx investment xxxxxxxx the xxxx xxxxx undertake and it is also the xxxxxxxxxxx rate to use when xxxxxxxxxx performance, xxxxxxxxxxxx whether or xxx the xxxx has xxxxxxx value xxx its xxxxxxxxxxxxx xx xx xxxx to indicate the overall risk xxxxx xx x xxxxxxx xx xxxxxxxxx work xx xxx xxxxxxx with xxxx of it’ xxxxxxxxxxxx xxx higher xxx work, xxx xxxx xxxxx xxx company and vice versa.
2. Explain xxx xxxxxxx xxxxxxxxxx xxxx are xxxx to estimate xxx xxxx of common xxxxxxx
xxxx xx common xxxxxx is xxx xxxxxx xxxx of return xxxx xx xxxxxxxx xxxxxxx xx earn when investing xx shares of a xxxxxxx
xxxx of xxxxxx equity is xxxxxx xx xxxxxxxx xxxxx xxxxxx stockholders do xxx xxxx x xxxxxxxxxxxxx defined return similar to xxx interest on xxxxx xx dividends on xxxxxxxxx xxxxxx xxxxx xxx two
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