Compute the weighted average cost of capital, Financial Management

Assignment Help:

Q. Compute the weighted average cost of capital?

A company's subsequent to tax specific cost of capital are as follows:

Cost of debt                                                                10%

Cost of Preference Shares                                           12%

Cost of Equity Shares                                                   15%

The subsequent is the capital structure:

Source                                                                         Amount

Debt                                                                            3,00,000

Preference Share Capital                                             2,00,000

Equity Share Capital                                                   5,00,000

____________

 10,00,000

____________

Compute the weighted average cost of capital, Kw

Calculation of Weighted Average Cost of Capital using Book Value Weights:-

2373_Compute the weighted average cost of capital.png

The weighted average cost utilizing book value weights is 12.9%


Related Discussions:- Compute the weighted average cost of capital

Define the risk of cost of capital, Risk of cost of capital A straight...

Risk of cost of capital A straightforward assumption of traditional cost of capital analysis is that firm's business and financial risk are unaffected by acceptance and financ

Define what effects have mergers had on fees assessed, What effects have me...

What effects have mergers had on fees assessed for retail bank services? A: The effect is not clear. Market conditions and the level of competition frequently determine the cost

Dry up of liquidity and increased correlation, Hedge funds are short two ty...

Hedge funds are short two types of funding options. Describe in detail what these options are. Describe why these options become more valuable during a financial crisis. During

Example on modigliani and miller approach, Q. Example On modigliani and mil...

Q. Example On modigliani and miller approach? The subsequent is the data regarding two companies X and Y belonging to the same risk class: Company X

Traditional approach to valuation, Under this approach of Valuation, ...

Under this approach of Valuation, all cash flows are discounted using single interest rate (discount rate).  For example: Consider the 5-year (7.00 percent) Treas

Financial issues of divestitures, FINANCIAL ISSUES OF DIVESTITURES Many...

FINANCIAL ISSUES OF DIVESTITURES Many corporations review the business portfolio to determine the operations that fit their core strategies. The firm's desire to achieve more f

Evaluate financial report and analysis, Project Specifications Complete...

Project Specifications Complete an individual Financial Report and Analysis. You will select a company that you would like to analyze based on the parameters provided by the

Quantitative or mixed-methods study, Application: Critiquing a Qualitative,...

Application: Critiquing a Qualitative, Quantitative, or Mixed-Methods Study Over the last several weeks you have explored many qualitative, quantitative, and mixed-methods rese

Managing finance, Read the journal article Lafferty, B. A., & Hult, G. T. M...

Read the journal article Lafferty, B. A., & Hult, G. T. M. (2001) ‘A synthesis of contemporary market orientation perspectives’, European Journal of Marketing, 35 (1/2), pp. 92–109

Stable money measurement, Stable Money Measurement A business entity e...

Stable Money Measurement A business entity enters within numerous transactions in which affect the business in varied ways.  Therefore recording, classification and summarizat

Write Your Message!

Captcha
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