Banking financial services industries

Assignment Help Finance Basics
Reference no: EM132645936

In Module 6, you were exposed to the Cost of Capital by Sector (NYU STERN): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm

One of the columns provides the percentage of debt financing by industry (D/(D+E)). There are several industries with low percentages of debt financing. Take a look and identify some with a low percentage of debt financing and do the same with firms that have a high percentage of debt financing (the average according to the data in the link is about 42 percent).

Do not use the banking financial services industries.

-Based on the types of firms that use a small amount of debt and those that use higher amounts of debt, what can you conclude?

-What is it about the firms that use low amounts of debt?

-More debt would lower their cost of capital so what is holding these firms back from taking on more debt? You need to think a little. Do not simply say the firms with low debt are all in industry X or industries similar to X; that is obvious. What is the economic intuition? What is the story?

Reference no: EM132645936

Questions Cloud

What is the amount of payment : Today, you are purchasing a 20-year, 6 percent annuity at a cost of $85,000. The annuity will pay annual payments. What is the amount of each payment?
Explain origin and development of texas constitution : What are the key components of consideration that went into forming the Texas Constitution? Explain the origin and development of the Texas constitution.
Current value per share-lsus corporation : LSUS Corporation is expected to pay annual dividends of $1.70, $1.95, and $3.00 a share over the next three years, respectively.
Find how many years will take to pay off : Find How many years will it take to pay off if the monthly payment is $2960? You borrow $300,000 at 8 percent interest compounded monthly.
Banking financial services industries : Based on the types of firms that use a small amount of debt and those that use higher amounts of debt, what can you conclude?
How much better off would Kristen be : Kristen, president and sole shareholder of Egret Corporation, has earned a salary bonus of $30,000 for the current year. How much better off would Kristen be
Determine what would be annual payments : You would like to purchase a car with a negotiated price of $28,000, If repayments are to be made annually, what would be your annual payments?
Definition of political science : Locate a definition of political science that you like, and in your Discussion Board post, explain why you favor it.
Explain corporate bond interest : Explain corporate bond interest in terms of cost of capital versus investor yields. Also, explain the municipal bond interest in terms of investor yields.

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the firm weighted average cost of capital

The preferred stock has a par value of $ 100. The outstanding debt has a total face value of $100000 and a market price equal to 102 percent of face value. The yield to maturity on the debt is 9.36 percent. What is the firm's weighted average cost..

  How many months will it take for the account to be paid off

You have agreed to payments of $335 per month and will charge a monthly interest rate of 1.11 percent. How many months will it take for the account to be paid

  Basis of a mistake in the first appraisal

In the counteroffer, Englesen asked Kepple to remove from their contract a clause requiring written confirmation of the availability of a "free split"

  What present value and future value are in you own words

Explain what Present Value and Future Value are in you own words. What is the difference between the Present Value of $ and the Present Value of an Annuity?

  Find the effective rent for option

Find the effective rent for each option given the following lease conditions over the next 5 years using a 12% discount rate:

  Association of certified fraud examiners

This assignment deals with the Association of Certified Fraud Examiners. Search the Internet to find their website. Using information obtained at this website, address the following questions in the form of brief paragraphs:

  Health and disability insurance for liz and larry

They have no children, but they hope to start a family in about three years. Liz's employer provides disability income insurance, but Larry's does not.

  Sophisticated machinery for a special three-year project

Bellington, Inc. is considering the purchase of new, sophisticated machinery for a special three-year project. The machinery requires a special lubricating oil that probably will never be used, but must be available at all times should the machine..

  How capital gains taxes may be hurting james net returns

James Welling, a 37-year-old engineer has an appointment to meet you in about an hour. As you are reviewing his accounts, you notice that he is a fairly active.

  What is the definition of the cross rate arsclp

What is the definition of the cross rate ARSCLP? How much is the cross rate ARSCLP?

  Morgan corporation must obtain 8 million in financing for

morgan corporation must obtain 8 million in financing for its expansion plans. the firms credit rating is good. common

  What is the cash flow margin

Given that Good Health Clinic is a not-for-profit organization with 100% equity, what is the cash flow margin?

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