MT217 Unit 7 Discussion
Capital budgeting involves decisions about whether or not to invest in fixed assets, and it has a major influence on firms' future performances and values. Discounted cash flow analysis is used in capital budgeting, and a key element of this procedure is the discount rate used in the analysis. Capital must be raised to finance fixed assets, and this capital comes from different sources: debt, preferred stock, and common equity. Each of these capital components has a cost, and these cost rates, along with the target proportions of each, are used to calculate the firm's weighted average cost of capital or "WACC."
Go to http://ro.uow.edu.au/commpapers/317/. In the middle of the page, click on the link for "Download the Document" (PDF Format). This will open a new document in Adobe Acrobat. Read the article titled "A Comparison of the Weighted Average Cost of Capital for Multinational Corporations: The Case of the Automobile Industry Versus the Soft Drink Industry."
After you have completed the above, answer the following question:
Identify some problem areas in the cost of capital analysis. Do these problems invalidate the cost of capital procedures we are discussing in this unit?
problem areas in the cost of capital analysis with respect to the research paper
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with xxxxxxx xx xxx paper, xxxx can xx xxxxxxx as
xxxx xxx xxxx components - xxxx xx debt, xxxx xx equity, xxx rate xxx xxxxxxx structure.
xxx paper xxxxxxxxx two industries- soft xxxxx and xxxxxxxxxxxx
In soft xxxxx xxxxxxxxx there are 4 xxxxxxxxx xx xxx world that control the majority xx xxx xxxxxxx When xx analyse their xxxxx xxxxx is xxxxxxxxxx due to xxxxxxxxxx xx the xxxxx xx xxxx xxxx xxxx due to the fact xxxx they xxx operational xx xxxxxxxxx countries.
xx xxxxxxxxxx industry, x companies xxxx been considered in the world
cost xx xxxxxxx differ xxxxxx xxx countries xxx companies in xxx xxxx xxxxxxxxx
xxx xxx company xxx xxx xx x xxxxxxx xx various countries. xx should xxxxxx xxx one xxxxx cost of capital is xxxxxxxx
when xxx xxxxxxx xxxxxxxx xx various xxxxxxxxxxxx areas, xx xxx this xx xxx advantage.
xx xxxxx xxxxxxxx xxxxxxxxxx xxx xxxx of capital procedures we are discussing in this xxxxx
no, the xxxx of capital xxxxxxxxxxx would have xx xx done time xxx again xxxx
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