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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xxxxxxx xxxxxxxxx is the process xx evaluating xxxxxxxx xxxxxxxxxx projects for x firm. Therefore by using xxxxx you are xxxx to determine xxx xxxxxxxx xxxx xxx investment projects the firm might undertake and it is xxxx the xxxxxxxxxxx xxxx to xxx when xxxxxxxxxx
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xx Why xx xxx xxxx used in xxxxxxx budgeting?
xxxxxxx xxxxxxxxx is the xxxxxxx of xxxxxxxxxx proposed investment xxxxxxxx for x firm. xxxxxxxxx by xxxxx WACC, xxx xxx xxxx xx determine xxx discount rate xxx investment projects xxx xxxx xxxxx undertake and xx xx also the appropriate rate xx use when evaluating xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxx or xxx the firm xxx created value xxx its xxxxxxxxxxxxx it xx xxxx to indicate xxx xxxxxxx xxxx xxxxx of x xxxxxxx xx xxxxxxxxx work xx xxx xxxxxxx xxxx xxxx of xx’ competitors. xxx xxxxxx the work, the xxxx xxxxx xxx xxxxxxx and xxxx xxxxxx
2. xxxxxxx the xxxxxxx approaches xxxx xxx used to estimate the cost of common xxxxxxx
xxxx of xxxxxx xxxxxx is the annual rate xx xxxxxx xxxx xx investor xxxxxxx to earn xxxx investing xx xxxxxx of a xxxxxxx
Cost xx xxxxxx xxxxxx xx harder to estimate xxxxx common xxxxxxxxxxxx xx not have x contractually defined return similar xx xxx xxxxxxxx on bonds xx dividends xx xxxxxxxxx xxxxxx There are two
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