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!
Q. Explain Marginal cost of capital?
The calculation of cost of capital focused when the firms total financing and its paten of financing is given and remains constant. However in practice the investment proposal may require funds to be raised from new internal external sources and thus, increasing the total funds also.
The cost of capital of the additional funds is called the marginal cost of capital. If the additional financing uses more than one source, say a combination of debt and preference share capital, then the WACC of the new financing is called the Weighted Marginal Cost of Capital (WMCC).
The WMCC for any firm depends upon several factors and therefore the calculation of WMCC is a typical exercise. The following variables may affect the marginal cost of capital of a specific source and thereby may affect the WMCC as follows:
1) The investors may perceive an increase in business risk of the firm.
2) The financial risk of the firm may also change as a result of change in composition of the capital structure.
3) The increase in business and financial risk may increase the marginal cost of capital.
Given the following information, find the Weighted Average Cost of Capital (WACC). Assume the corporate tax rate is 35%, and give an answer based on market values of debt and equi
Margining System: Indian capital markets have finally acquired an international flavor with the market-wide rolling settlement coming into place on both the premier exchanges (
What can a financial institution often do for a surplus economic unit that it would have difficulty doing for itself if the surplus economic unit (SEU) were to deal directly with a
We have seen computation of present value using single discount rate. But the right way to value a cash flow of a bond is to use multiple discount rates, i.e valuing th
Company capacity to continue trading Given the preceding discussion it is unlikely that the business can continue in its current form. The trading performance is clearly very
Evaluation of money-market hedge Expected receipt after 3 months = $300000 Dollar interest rate over three months = 5.4/ 4 = 1.35% Dollars to borrow now to have $300000 l
Internal capital rationing is used by firms for exercising financial control. How does a firm achieve this?
Floaters that can be classified under this head are: 1. Stepped Spread Floaters 2. Extendible Reset Bonds
how would you judge the potential profit of bajaj electronics on the first year of sales to booth plastics and give your views to increase the profit ?
Financial Repor ting The process of preparing the corporation's financial statements in accordance with generally accepted accounting principles. The statements prepare
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