Discussion 5.1
What is the weighted average cost of capital, WACC? Discuss in details its financial importance and value.
Discussion 5.2
What is capital budgeting? Discuss in details its financial importance and value.
Assignment # 5.1
Answer all questions:
1. What is the Weighted Average Cost of Capital. Discuss.
2. What is a component cost?
3. Why is no tax adjustment made to the cost of preferred stock.
4. Explain both the historical and the forward looking approaches to estimating the market risk premium.
5. What are the two primary sources of equity capital?
6. Should the weights used to calculate the WACC be based on book values, market values, or something else? Explain.
7. What are flotation costs?
8. List six procedures for screening projects and deciding which to accept or reject.
9. Differentiate between a project’s physical life and it’s economic life.
10. What is capital rationing?
Also answers the questions attached is the screen shot below:
Also answers the questions attached is the screen shot below:
Also answers the questions attached is the screen shot below:
Also answers the questions attached is the screen shot below:
Weekly Summary 5.1
Each week you will write and submit a brief summary of the important concepts learned during the week. The summary will include a summary of the instructor’s weekly lecture including any videos included in the lecture.