Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Breaks in Specific Cost of Capital: The specific costs of capital may also be affected by the amount of finance the firm wants to raise. As the amount of financing increases, the costs of various sources may also increase. These increasing costs are attributable to the fact that the investors would require greater returns to be compensated for the increased risk resulting from the larger volumes of new financing. Consequently, the WMCC tends to rise as the firm seeks more and more funds. Breaks in specific cost of capital occur as a function of the amount of funds being raised. The levels at which the specific cost of capital of a particular source increases are called the breaking points. The firm must find out at what levels of total new financing, the breaks in 'specific cost of capital and consequently breaks in WMCC occur and should also measure the WMCC at each of such breaks.
The following procedure can be used to measure the WMCC when the specific cost of capital depends on the amount raised:
a) Establish the percentage composition of new financing.
b) Prepare a list for each such source of financing giving the amount of funds that can be obtained and the specific cost of capital associated with each amount to be raised. The spe-cific cost of capital can be determined through an analysis of the current market conditions.
c) On the basis of the percentage composition of the total new financing (step1), estimates the breaking points in the WMCC. The break points identify the levels of the total new financing at which the WMCC increases.
Question 1 Briefly explain the important legislations that regulates the insurance sector Question 2 What do you mean by sales cycle? Briefly explain the different stages in
1) Is foreign exchange risk systematic? What are the implications of your answer regarding corporate hedging policy with respect to foreign exchange risk? In your answers make sure
what is the benefits of UMMB
Example of Company Objectives Divide from the problem of which goal a company ought to pursue are the questions of which goals companies claim to pursue and which goals they a
Monte-Carlo Simulation Let us, for a shortwhile, leave the illustration for determining the price and consider a simpler illustration for understanding the Monte-Carlo method
Determine the Objectives of the Firm Objectives of the Firm - Profit Maximisation and Wealth Maximisation To put it simply, we may say that goal of any business is to max
The amount by which the market price exceeds the conversion value or the investment value called the premium. When expressed as a percentage, it is given by,
Calculate the price of Winnebago stock (Winnebago has no debt so this is the market value of the firm seperated by the number of common shares outstanding.) from the cashflows you
exercise
Issuance of securities : Security issues by companies are a novel and common way of raising funds that in turn help realize their growth aspirations. It is therefore necessary
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd