Why is the wacc used in capital budgeting

Assignment Help Finance Basics
Reference no: EM131061151

1. Why is the WACC used in capital budgeting?

2. What are some of the factors that affect the cost of capital?

3. Is it something that a company can control?

Reference no: EM131061151

Questions Cloud

What is the after tax salvage cash flow for this new machine : A company is considering a 5-year project to expand production with the purchase of a new automated machine using the latest technology. The new machine would cost $180,000 FOB St. Louis, with a shipping cost of $7,000 to the plant location. Installa..
Variable growth a fast-growing firm recently paid : VARIABLE GROWTH A fast-growing firm recently paid a dividend of $0.35 per share. The dividend is expected to increase at a 20 percent rate for the next three years. Afterwards, a more stable 12 percent growth rate can be assumed. If a 13 percent disc..
Consider the calculation of an external rate of return : Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to t = n using what value of i in the (F/P, i, n-t) factors? A) 0 B) the unknown value of ERR (i') C) MARR D) IRR
Determine the range of values of p for which equilibrium : Determine the range of values of P for which equilibrium of the block shown is maintained.
Why is the wacc used in capital budgeting : 1. Why is the WACC used in capital budgeting? 2. What are some of the factors that affect the cost of capital?
What is anle expected dividend yield : Anle Corporation has current price of $21 and is expected to pay dividend of $1 in 1 year and its expected price right after that dividend is $23. A) What is Anle's expected dividend yield? 4.76
What amount will be in the account after the deposit : A deposit of $800 is planned for the end of each year into an account paying 8 percent/year compounded annually. The deposits were not made for the tenth and eleventh years. All other deposits were made as planned. What amount will be in the account ..
Approximate bond modified duration : Consider a 30-year corporate bond paying 8 percent semi-annual coupon. The current yield to maturity is 10 percent. Find the approximate bond's modified duration by using changes in the interest rate up and down by 5 basis points.
What is the primary role of a board of directors : BULAW5915 Corporate Law - What is the primary role of a board of directors and what does the term 'independent director' mean? Give an example of a non- independent director.

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the true interest cost of the commercial paper

The company has a 90 day commercial paper at a 6.50% discount rate. The cost is 0.25% per year. What is the true interest cost of the commercial paper (APY), including the cost of the backup line?

  Estimated a relationship between volatility

Suppose that we estimated a relationship between volatility, y, in percent, and the number of stocks in a portfolio, x, given by y=70-1.5x. How many stocks would be required to achieve a volatility of 15%?

  Contract negotiations and risks and operating margins

In the scenario, the contract negotiations between North Creek Healthcare and the community hospital concluded with an agreement on non-financial (legal) terms. Suggest the most critical element of the contract and the impact to the short-term and..

  Describe the primary goals of the claim function

Describe the primary goals of the claim function. Differentiate between a first-party claim and a third-party claim. Describe the marketing department's need for claim information.

  How much does the investor gain or lose if the exchange

an investor enters into a short forward contract to sell 100 000 british pounds for us dollars at an exchange rate of

  Briefly describe one 1 way the us financial markets impact

1.briefly describe one 1 way the u.s. financial markets impact the economy one 1 way the u.s. financial markets impact

  What annual interest rate is idaho first bank pay

The company plan to make 20 equal deposits of $186,078.54, starting in six months, to accumulate the $5 million fund. What annual interest rate is Idaho First Bank & Trust paying on the balance of the fund?

  What is the cost of capital for an otherwise identical

What is the cost of capital for an otherwise identical all-equity firm? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

  A company has a beta of 175 if the market return is

a company has a beta of 1.75. if the market return is expected to be 18.0 percent and the risk-free rate is 6.00

  Monthly mortgage payment

Compute the monthly mortgage payment made at the beginning of each month on a $100,000 mortgage.

  What is the current price of the common stock

The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

  Explain the implications of taking out a secured loan

Provide a simple explanation of the difference between a secured loan and unsecured loan to Natalie for the purpose of her loan and explain the implications of taking out a secured loan.

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