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

How to develop career strategy, Q. How to develop career strategy? in t...

Q. How to develop career strategy? in this step employees need to focus on developing the knowledge experience and skills necessary to market self to prospective organizations.

Determine earnings per share - shares of common stock, SAM Technology had A...

SAM Technology had AED 640,000,000 of retained earnings on December 31, 2012. The company paid common dividends of  AED 30,000,000 in 2012 and had retained earnings of  AED 500,000

Concepts of cost of capital, Concepts of Cost of Capital 1. Explicit ...

Concepts of Cost of Capital 1. Explicit Cost And Implicit Cost The explicit cost of any source of finance may be described as the discount rate that equates the current v

Variable costs, V ariable Costs It is an expense that varies direct...

V ariable Costs It is an expense that varies directly with changes in business activities for example the cost of raw materials rise and decreases as the volume of producti

Common size financial statement, Common Size Financial Statement Common...

Common Size Financial Statement Common Size Financial Statement is a company financial statement that shows all items as percentages of a common base figure. This kind of finan

Evaluate the annual premium for policy, A with-profit whole life assurance ...

A with-profit whole life assurance policy was issued to a life then aged 25 with: • basic (initial) sum assured of S = $100,000; • bonuses added to sum assured at the end of ea

Operating cyle, discuss the applicabilty of the operating cycle in a vegeta...

discuss the applicabilty of the operating cycle in a vegetable growing business

Equity theory, Equity Theor y This theory proposes that indivi...

Equity Theor y This theory proposes that individuals measure their out- comes/input ratio. Equity theory distinguish that inspiration is not the outcome of an absolute

Business venture, Project Plan for my new business venture is attached) ...

Project Plan for my new business venture is attached) 1.     Your task is to take a look at every of the operational areas of the intended business, and verify  what financial i

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