Capital for its different operating divisions

Assignment Help Corporate Finance
Reference no: EM13203848

Under what circumstances would it be appropriate for a firm to use different costs of capital for its different operating divisions? If the overall firm WACC were used as the hurdle rate for all divisions, would the riskier divisions or the more conservative divisions tend to get most of the investment projects? Why? If you were to try to estimate the appropriate cost of capital for different divisions, what problems might you encounter? What are two techniques you could use to develop a rough estimate for each division's cost of capital?

Reference no: EM13203848

Questions Cloud

How many will eat vanilla ice cream : how to solve problem-5 out of 6 people will eat vanilla ice cream . total amt of people is 144. How many will eat vanilla ice cream.
Find the temp of the ice water after 30min : Find the temp of the ice water after 30min.
By how many degrees did it drop each minute : During a chemical reaction,the temperature in the beaker decreased every minute by the same number of degrees. The temperature was 16°C at 11:08 A.M. By 11:43 A.M., the temperature had dropped to-17°C. By how many degrees did it drop each minute?
At what time has the amplitude of oscillation : At what time has the amplitude of oscillation of a spring-mass system with negligible friction decayed to 1/e of its original value? Does this time depend in a reasonable way on k, m, and c?
Capital for its different operating divisions : what problems might you encounter? What are two techniques you could use to develop a rough estimate for each division's cost of capital and Under what circumstances would it be appropriate for a firm to use different costs of capital for its diffe..
What is the average of the two temperatures : the highest recorded temperature is 136 farenheit and the lowest record temperature is -128.6 farenheit. what is the average of the two temperatures?
Are any of the stocks an obvious buy compared : Given the following additional data: HPG T CSCO 5 year expected dividend growth rate(%): 8.44 4.04 4.68 Long term growth rate after 5 years (%) 5.5 2.0 5.5 Stock Price($) dividend($ annual) Hewlett Packard (HPQ) 25.63 0.48 AT&T (T) 29.39 1.74 Cisco S..
Compute the work required to compress : Compute the work required to compress a spring 2 more cm when it is already compressed 3 cm, assuming that the spring constant is k = 150 kg/s2.
How much will beths greedy father get : If Beth's greedy father imposes a charge of $2 per acre for use of the family mower, how will this affect Beth's marginal cost function How will it affect her profit-maximizing decision What will her profits be now How much will Beth's greedy fath..

Reviews

Write a Review

Corporate Finance Questions & Answers

  Preferred strategy for managing an all-property portfolio

Carry out research, through a website search, into two major property companies with different approaches to managing investment portfolios.

  Invest dollars in the mexican stock market

Determine your expected dollar return from investing dollars in the Mexican stock market for the next 90 days.

  Calculate the return on the preferred stock

CDE is issuing preferred stock with dividends at 8.12 percent of $25 par value.

  Computing the value of stock price

Computing the value of stock price with discounting the future discounts - how much must preferred stockholders be paid prior to paying dividends to common stockholders?

  Define what is meant by interest rate risk

Define what is meant by interest rate risk. Assume you are the manager of a $100 million portfolio of corporate bonds and you believe interest rates will fall. What adjustments should you make to your portfolio based on your beliefs?

  What are the ethical issues in this case

Donald Lennon is the president, founder, and majority owner of Wichita Medical Corporation, an emerging medical technology products company.

  Calculate your total percentage return

Calculate your total dollar return and calculate your total percentage return - Estimate the expected return on stocks and explain how and why you arrived at your answer.

  Probability of company defaulting

You notice that it has been trading at 55% lately and you are told that there is a market rumour that you will only pay back 40% of the debt.  What is the implicit market estimate of the probability of your company defaulting?

  Explain what would have been the amount of inventories

Explain what would have been the amount of inventories in 2011 if the 2010 turnover ratio had been maintained?

  Find the weighted average cost of capital

Determine the weighted average cost of capital for the following corporation? It has 500,000 in debt, 200,000 in common stock & 600,000 dollar ($) in preferred stock.

  Proper value of the securities being offered

Render an opinion to potential investors on the proper value of the securities being offered

  Determine the amount to pay for the stock

A share of stock of PJB, company pays an yearly dividend of $9.50. Determine how much would you be willing to pay for the stock if your required return is 15.8 percent.

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