Weighted average cost of capital or composite, Financial Management

Assignment Help:

Q. What is denoted by weighted average cost of capital OR Composite? How is it calculated? Exemplify with an example.

Ans. Weighted Average Cost of Capital: - Capital formation of a company consists of different sources of capital. Cost of these diverse sources of capital is as well calculated by different methods. Therefore after the calculation of cost of capital of these diverse sources of capital a practical complexity happen as to what is the cost of overall capital structure of the firm. In order to resolve this problem finance managers developed the concept of Weighted Average Cost of capital. It is as well known as Composite Cost or Overall Cost.


Related Discussions:- Weighted average cost of capital or composite

Define the p/e valuation method, Define the P/E valuation method. Under wha...

Define the P/E valuation method. Under what circumstances should a stock be valued using this method? The P/E ratio specifies how much investors are willing to pay for each dol

Calculate the new interest rate and excel function pv, Continuing growth of...

Continuing growth of the company has required that we issue the company''s corporate debt soon. As you know, in 6 months we plan to issue $10 million worth of 20-year corporate bon

Relate lost sales to the definition of incremental cash flow, Relate the co...

Relate the concept of lost sales to the definition of incremental cash flow. While a new capital project is take on it may compete with an existing project or projects, causing t

Explains the reason for the negative synergistic gains, What can be the rea...

What can be the reason for the negative synergistic gains for British acquisitions of U.S. firms? Negative synergies for British acquisitions of U.S. firms (united state firms) m

Aligning financial reports, Aligning Financial Reports: The primary pur...

Aligning Financial Reports: The primary purposes of financial systems are to provide information to interested parties.  Any reports produced through the financial management p

Dividend policy, #questThe managing directors of three profitable listed co...

#questThe managing directors of three profitable listed companies discussed their companies'' dividend policies at a business lunch. Company A; has deliberately paid no dividends

Determine the concept of measuring the rate of return, Determine the concep...

Determine the concept of Measuring the Rate of Return The rate of return is total return the investor receives during holding period (the period when security is owned or held

George thomas, which type of financing is appropriate to each firm

which type of financing is appropriate to each firm

Price-yield relationship of a callable bond, The price-yield relation...

The price-yield relationship of a non-callable or a non-putable bond is convex because price and yield are inversely proportional. Figure 1 shows the price-yield

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