Payback period is often used investment decision

Assignment Help Financial Management
Reference no: EM132050655

Payback period is an often used investment decision analysis tool. It is simple and easy to calculate. However, you know this is not the best decision criterion. Why not?

According to the following information, what is the firm's optimal capital structure?

Proportion Earnings Per Weighted Average Cost of Debt Share (EPS) of Capital (WACC)

30% $2.50 13.2%

40 3.80 12.7

50 4.75 12.4

60 5.25 12.8

(answer no percentage, whole number only)

Reference no: EM132050655

Questions Cloud

What is SoCal optimal capital structure : Following are the results of the capital structure analysis SoCal Irrigation just completed. what is SoCal's optimal capital structure?
What kind of training or education is required : What kind of training or education is required? Are there continuing education requirements? Are there licensure or certification considerations?
Do other types of companies face similar dilemmas : IPR protect drug companies from others making their products without the expense of investing in research and development.
Firm will experience financial failure : Compute the Z score for Zero Company. comment on the likelihood that this firm will experience financial failure.
Payback period is often used investment decision : Payback period is an often used investment decision analysis tool. what is the firm's optimal capital structure?
What is the net present value of refinancing : What is the net present value of refinancing if you assume that refinancing costs will be 3% of the new loan amount
Indecisive about which stock to buy : You are indecisive about which stock to buy. Microsoft, which is selling for $96 a share; or Apple, which is selling for $170 a share.
How to they effect business decisions : What are the three distinct types of decisions that are issued by the U.S. Supreme Court. How to they effect business decisions?
Principal and interest payments with no rate adjustments : Assume the counterparties would exchange principal and interest payments with no rate adjustments.

Reviews

Write a Review

Financial Management Questions & Answers

  Find the annual time-weighted yield of this fund

Find the annual time-weighted yield of this fund over this period.

  Dropped so low due to current economic condition

You want to purchase a new car since the prices have dropped so low due to the current economic condition.

  With interest charged quarterly on average balance

A bank offers a client a choice between two financing options for a one-year period: Option1: a term-loan for the full year of $500,000 to be repaid at the end of the year with interest fixed at 12% per year. Option 2: An overdraft, with a quoted rat..

  What is the probability of occurrence of return less

What is the probability of occurrence of a return less than 2 %? Make a sketch showing your answer as an area under the normal curve.

  Determine impact of implementation of new technologies

A student project at WCU was initiated to try to determine the impact of implementation of new technologies.

  What annual rate did coin appreciate from its first minting

A coin that was featured in a famous novel sold at auction in 2014 for $4,687,000. The coin had a face value of $1 when it was issued in 1787 and had previously been sold for $290,000 in 1967. At what annual rate did the coin appreciate from its firs..

  Firm weighted average cost of capital

BlockOut Co. has 78,543 bonds outstanding that are selling at par value. What is the firm's weighted average cost of capital?

  What is the npv of buying the new lathe

Ilana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1 million. The lathe will cost $36,000 to run, will save the firm $123,000 in labour costs, and will be useful for 11 years. What is the NPV of buying the new lathe?

  Consider in factors that could affect financial analyses

Do you have any other suggestion that might want to consider in their factors that could affect their financial analyses?

  The standard deviation of those returns in this period

Assume that the returns from an asset are normally distributed. The average annual return for this asset over a specific period was 17.1 percent and the standard deviation of those returns in this period was 43.8 percent. What about triple in value?

  Considering putting it self up for sale

Jewwl-Osco is considering putting it self up for sale. Supervalve is earnings have taaken a hit in the most recent quarter, falling 45%

  Declining balance depreciation method

Calculate 1,800,000 of investment to be deprecated over 8 year using Declining Balance Depreciation method and declining balance rate of 200%. Show your work in detail please.

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