Describe capital structure of apex

Assignment Help Finance Basics

Reference no: EM13862837

Deliverable Length: 750 – 1,000 words. Use Word.

In this exercise you need to describe capital structure of Apex, calculate the weighted average cost of capital (WACC) and define marginal cost of capital. You must indicate how these costs of capital might be used to determine the feasibility of the capital project.

Please show your work and the equations that you use to calculate the WACC. --

Given:

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%

Organize your work under the following headings:

Describe capital structure --
Determine the WACC given the above assumptions. --
Indicate how these, WACC and Capital Structure, might be useful to determine the feasibility of the capital project.
Define marginal cost of capital. --
Recommend which is more appropriate to apply to project evaluation, the capital structure or the WACC.

Reference no: EM13862837

Questions Cloud

Advantage of any global opportunities available to riordan : advantage of any global opportunities available to Riordan

Magnitude of all ac components : Shows an RC circuit with input voltage x (t) and output voltage y(t). The RC circuit is to be used as a low-pass filter - The value of the capacitor used in the design should be as small as possible.

What are the benefits of 401k/ira accounts : Q1. What are the benefits of 401k/IRA accounts over regular taxable accounts? Q2. How will "you" allocate $50k between stocks and bonds? Justify your decision.

Project requires to create a written budget proposal : The project requires you to create a written budget proposal, a supporting Excel workbook showing your calculations

Describe capital structure of apex : In this exercise you need to describe capital structure of Apex, calculate the weighted average cost of capital (WACC) and define marginal cost of capital. You must indicate how these costs of capital might be used to determine the feasibility of the..

A violation of the gsu honor code : Directions: This problem set covers chapters 6 and 7 in the textbook. Determine or compute an answer for each question/problem. After you have computed an answer for every question, enter your answers online via the “quiz” function entitled “THPS-3 A..

Discuss plato idea about proper way to investigate reality : Discuss Plato's idea about the proper way to investigate reality, and compare his method with the method that is used by modern scientists

Default risk premium on the corporate bond : A Treasury bond that matures in 10 years has a yield of 4.25%. A 10-year corporate bond has a yield of 7.25%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer t..

The most votes in the upcoming election : A congressman's district has recently been allocated $45 million for projects. The congressman has decided to allocate the money to four ongoing projects. However, the congressman wants to allocate the money in a way that will gain him the most votes..

User Account

All Pages