Low weighted average cost of capital

Assignment Help Financial Management
Reference no: EM131444328

Why is it important for a business to have a low Weighted Average cost of capital (WACC)? How is the business affected negatively with a higher WACC? And how can a business lower it's WACC?

Reference no: EM131444328

Questions Cloud

Enough funds for retirement : Suppose you wish to retire 35 years from today. You determined that you need $120,000 per year after you retire, with the first retirement funds withdrawn one year from the day you retire and that you will need to make 25 such withdrawals. How much m..
What is its net income : Precious Metal Mining has $17 million in sales, its ROE is 10%, and its total assets turnover is 4x. Common equity on the firm’s balance sheet is 55% of its total assets. What is its net income? Write out your answer completely.
How much money will you need while your son goes to college : You are setting up a college fund for your soon who is going to college in 3 years. The tuition bill is $15,000 a year for four years. Assume the discount rate is 6%. How much money will you need while your son goes to college? What is the amount of ..
What is the current equivalent lump sum of your settlement : After an injury, you win a lawsuit judgment of $3160 per month starting next month for a total of 47 months. If the interest rate is 2.5% APR compounded monthly, what is the current equivalent lump sum of your settlement?
Low weighted average cost of capital : Why is it important for a business to have a low Weighted Average cost of capital (WACC)? How is the business affected negatively with a higher WACC? And how can a business lower it's WACC?
Find a web article related to time value of money : Find a web article related to time value of money Post a link to the article and respond to the article, discussing why you find it especially interesting Also, and critically, how would you improve the analysis?
An optometrist sells custom-ordered eyeglasses : An optometrist sells custom-ordered eyeglasses. Assume the optometrist maintains no stock of lenses or frames (except for some sample frames to show customers), but custom orders everything from a manufacturer.
Identifying assets to be transferred to the subsidiary : ABC Software Company sells software and hardware for computers. The federal government brings an antitrust action against ABC seeking divestiture of ABC's hardware division. identifying assets to be transferred to the subsidiary, organizing the subsi..
What is the present value of the annuity : A 10-year annuity pays $1,400 per month, and payments are made at the end of each month. If the interest rate is 12 percent compounded monthly for the first five years, and 8 percent compounded monthly thereafter, what is the present value of the ann..

Reviews

Write a Review

Financial Management Questions & Answers

  Sole proprietorships and partnerships

Sole Proprietorships and Partnerships What are the four primary disadvantages of the sole proprietorship and general partnership forms of business organization? What benefits are there to these types of business organization as opposed to the corpora..

  What is the expected return on the portfolio

You own a portfolio that has $1,900 invested in Stock A and $3,000 invested in Stock B. Assume the expected returns on these stocks are 8 percent and 14 percent, respectively. Required: What is the expected return on the portfolio? (Do not round inte..

  Discuss your interview process-time management

Interview/Observation: Discuss your interview process. In this section, you may want to address things like difficulties or successes you had finding or planning your interview/observation, surprises you encountered, how or if you could have done you..

  Net financing in order to keep debt-equity ratio constant

Sallustro, Cira Efor the next fiscal year, you forecast net income of $51,300 and ending assets of $503,800. your firm's payout ratio is 9.9%. your beginning stockholders' equity is $296,800 and your beginning total liability are $120,200. what amoun..

  Number of shares outstanding-price per share after split

A company has just announced a 3-for-1 stock split, effective immediately. Prior to the split, the company had a market value of $5 billion with 100 million shares outstanding. What is the value of the company, the number of shares outstanding, and p..

  The cash flow follows normal distribution

Using a simulation technique calculate Pr(NPV> $250,000) and Pr(NPV

  Does the project make sense at a discount rate

Suppose a project costs 200,000 today, 100,000 next year and 15000 to dispose of it in ten years when the project is discontinued. Once finished three years from today, it is expected to generate a net income of 40000 per year until it is discontinue..

  Recall the mechanism behind continuous compounding

Recall the mechanism behind continuous compounding: the whole period is divided into increasing numbers of smaller and smaller sub-periods, and the resulting effective rate is calculated as a limit of the effective rates under increasing number of su..

  Is the transporter a positive-NPV investment

Ted has bought a horse transporter for hi horse ranch for $35,000. The reason is he used to rent transporters to take his horses to competitions and wants to save money on those rental costs. Ted has been renting a transporter every other week (26 ti..

  According to the sharpe ratio

Mutual fund A earned 10 percent while B earned 8 percent. The standard deviations of the returns were 10 percent and 7 percent, respectively. According to the Sharpe ratio, which fund performed better?

  Exhibit low correlations of return with overall stock market

Diversification occurs when stocks with low correlations of returns are placed together in a portfolio. Identify at least one type of firm that might exhibit low correlations of returns with the overall stock market? Explain why the correlations of t..

  Calculations are based on an annual interest rate

Rebecca receives a life insurance benefit. If she uses the money to purchase 20-year annuity the annual payments will be X. If a 10-year annuity is purchased, the annual payments will be 1.5X. Both calculations are based on an annual interest rate i...

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