Costs of capital for different operating divisions

Reference no: EM13789196

Corporations often use different costs of capital for different operating divisions. Using an example, calculate the weighted cost of capital (WACC). What are some potential issues in using varying techniques for cost of capital for different divisions? If the overall company weighted average cost of capital (WACC) were used as the hurdle rate for all divisions, would more conservative or riskier divisions get a greater share of capital? Explain your reasoning. What are two techniques that you could use to develop a rough estimate for each division's cost of capital?

Your initial response should be 200 to 250 words.

Reference no: EM13789196

Questions Cloud

Economies of scale and efficiency : Economic factors - gross domestic product, inflation, interest rates, unemployment and what type of presentation do you have in mind, Lester? Elasticity of demand and economies of scale and efficiency

Projected return on investment : Develop a three- to four-page analysis, excluding the title page and reference page(s), on the projected return on investment for your college education and projected future employment. This analysis will consist of two parts.

The sarbane-oxley act : If an LLC fails to follow formalities such as keeping minutes of meetings, then which of the following is true? The Sarbane-Oxley Act of 2002 was enacted in order to

What are tqm and iso : What are TQM and ISO. How might TQM and ISO be used to improve an organization.

Costs of capital for different operating divisions : Corporations often use different costs of capital for different operating divisions. Using an example, calculate the weighted cost of capital (WACC).

This assignment is to research and analyze a topic of intere : This assignment is to research and analyze a topic of interest in the field of conflict resolution. Suggested topics for this assignment are to research: •The latest "best practices" in conflict resolution •Various communication styles •Power and eth..

Disaster to the biodiversity in the ecosystem : Give a brief overview of the impacted ecosystem including a description of the wildlife and human populations.

Machines internal rate of return is closest : Tidwell Corporation is considering the purchase of a machine costing $18,000. Tidwell estimates that this machine will save $5,000 per year in cash operating expenses for the next five years. If the machine has no salvage value at the end of five yea..

Maximum amount of new loans : What is the maximum amount of new loans that this bank can make? Assume that the bank makes these loans. What will the new balance sheet look like?

User Account

All Pages