Reference no: EM131196706
"We will need to determine the required return for our intended project so that we have a decision criteria defined for the project," she says.
"Do you have the information I need to describe capital structure and to calculate the weighted average cost of capital (WACC)?" you ask.
"I do," she smiles. "We can determine the target WACC for Apix Printing Inc., given these assumptions," she says as she hands you a piece of paper that says the following:
• Weights of 40% debt and 60% common equity (no preferred equity)
• A 35% tax rate
• Cost of debt is 8%
• Beta of the company is 1.5
• Risk-free rate is 2%
• Return on the market is 11%
"Great," you say. "Thanks."
"Be sure to indicate how these costs of capital might be used to determine the feasibility of the capital project," Mary says. "I want your recommendation about which is more appropriate to apply to project evaluation, too. Let me know what you think."
"One more thing," she says as she stands up to signal the end of the meeting. "You did a good job with the explanations that you provided Luke the other day. Would you have time to define marginal cost of capital for me so I can include it in my discussions with investors? You seem to have a knack for making things accessible to nonfinancial folks."
"No problem," you say. "I'm glad my explanations are so useful!"
For this assignment, complete the following:
• Describe capital structure.
• Determine the WACC given the above assumptions.
• Indicate how these might be useful to determine the feasibility of the capital project.
• Recommend which is more appropriate to apply to project evaluation.
• Define marginal cost of capital.
|
Abuse of monopoly-like economic power
: What was the basis of the U.S. government's finding against Microsoft (abuse of monopoly-like economic power)?
|
|
When matching type of innovation with supply-chain functions
: When matching the type of innovation with supply-chain functions, it is appropriate to match:
|
|
Opposed employer mandated national health insurance package
: Approximately 46 million Americans under age 65 are uninsured. About two-thirds of the uninsured are either employed (full- or part- time) or in a family with an employed member. Which groups favored and which groups opposed an employer mandated nati..
|
|
Discuss the theoretical communication model
: Briefly provide a context for your discussion regarding the importance of understanding communication in IMC and identify the organisation you have chosen and discuss the theoretical communication model outlined by Belch et al, (2014).
|
|
Calculate the wacc given the assumptions
: Determine the WACC given the above assumptions. Indicate how these might be useful to determine the feasibility of the capital project. Recommend which is more appropriate to apply to project evaluation.
|
|
Suppose that darnell is only consumer in apartment market
: Consider the market for apartments. The market price of each apartment is $140,000, and each buyer demands no more than one apartment. Suppose that Darnell is the only consumer in the apartment market. His willingness to pay for an apartment is $245,..
|
|
Economist estimated-cost function of single-product firm
: An economist estimated that the cost function of a single-product firm is: C(Q) = 60 + 30Q + 25Q2 + 5Q3. Based on this information, determine the following: The fixed cost of producing 10 units of output. $ The variable cost of producing 10 units of ..
|
|
Do you believe that us preventive services task force
: Do you believe that US Preventive Services Task Force (USPSTF) recommendations should be followed or do you believe screening should start at age 40? Why or why not? What type of surveillance would be appropriate/necessary for this type of situa..
|
|
Explain why is monetary amount of each fair share different
: Why is the monetary amount of each fair share different? How much money is owed to each of the two people who do not "win" the collection offrogs? In your opinion how "Fair" is the process described above?
|