Please this is an assignment that is due by the end of this week

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Please this is an assignment that is due by the end of this week
Answered Same DaySep 12, 2020

Answer To: Please this is an assignment that is due by the end of this week

Aarti J answered on Sep 14 2020
138 Votes
Sheet1
        Solution
    a1    WACC is the weighted average cost of capital which is used for making different long term capital invest
ment decisions usually for capital budgeting. Weighted average cost of capital considers different types of capital which includes long term debt, preferred stock and common stock. short term investments of the company consists of spontaneous non-interest bearing liabilities like accounts payables, and short term interest bearing debts like notespayable. Short term interest bearning debts are included and considered in the part of calculating cost of capital if they are used in acquiring the assets while non-interest bearing liabilities are not considered as a part of capital.
    a2    Debt is considered after tax while equity is concerned and are a part reinvestments from the dividends , thus all the cash flows are calculated after tax
    a3    In financial management, cost of capital is used to make certain decisions which involves issuing new capital and considers marginal costs
    b    Calculating cost of debt
        Tax rate    40%
        Coupon rate    12%
        PV    1153.72
        Nper    15
        FV =    1000
        Using excel function of rate
        Before cost of debt    10.00%
        After tax cost of debt    6.00%
    c1    Cost of preferred stock
        Pv =    116.95
        Flotation cost    5%
        Annual...
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