Essays Tagged: "Weighted average cost of capital"

The Cost of Capital is a critical element in business decisions.

nd bond markets that will vary over time as a function of the changing market forces for money. The Weighted Average Cost of Capital (WACC) measures the cost of the various types of capital companies' ... expected cash flows from investments and maintaining the value of outstanding securities.Figure 1 - Weighted Average Cost of Capital and Debt Ratios (Damodaran, 2004)The different perspectives and lev ...

(16 pages) 625 0 4.1 Jul/2005

The Right Mix- Debt vs. Equity

a newly started exotic coffee shop, while determining the right debt-equity combination and optimal Weighted Average Cost of Capital (WACC). Students were given ownership of an extremely popular coffe ... th trying to find suitable sources for capital while selecting a debt-equity mix that minimized the Weighted Average Cost of Capital (WACC). The selection of a capital structure with 70 percent debt r ...

(3 pages) 361 0 0.0 Mar/2006

Debt-Equity Mix Simulation: El Caf

f debt and equity. In this simulation provided by the University of Phoenix, I was asked to use the Weighted Average Cost of Capital (WACC), to find the optimal debt-equity mix for a café busin ... est loans and change my debt-equity mix to 70-30%. By using this mix, I was able to achieve a WACC (Weighted Average Cost of Capital) of 8.65%.What is WACC? Generally speaking, a company's assets are ...

(3 pages) 460 1 3.9 Mar/2006

El Cafe Simulation

allowing him to utilize his cash assets. Following will be a short discussion on the importance of weighted average cost of capital (WACC) and what impact WACC has on capital budgeting and structure. ... should reflect the actual environment in which a company operates. (McLure, 2003)To understand the Weighted Average Cost of capital, you must understand what story it tells. The capital funding of a ...

(4 pages) 190 0 3.0 Jun/2006

Marriot Corporation Cost of Capital

projects with returns below their respective WACC which will result in losses and vice versa.2.The Weighted Average Cost of Capital (WACC) is as average that reflects the expected return on all of a ... The betas are found in exhibit 3 so we can compare them to similar firms. These are used to find a weighted average beta for each division. Since each firm has a different capital structure it is nec ...

(4 pages) 617 0 2.3 Jul/2006

Determining the Debt-Equity Mix

ts of which will provide a substantial amount of money.Why is WACC Important to an Organization?The weighted-average cost of capital is the rate of return that the company must expect to earn on its a ... h their debt and equity) will decline.What Impact Does WACC Have on Capital Budgeting and Structure?Weighted average cost of capital is used to evaluate the project or to make capital budgeting decisi ...

(3 pages) 928 0 3.4 Aug/2006

Nike Inc.: Cost of Capital

st of capital is a critical element in such decisions and it is important to estimate precisely the weighted average cost of capital (WACC).In our analysis, we examine why WACC is important in decisio ... at Nike Inc.'s common stock should be added to the North Point Group's Mutual Fund Portfolio.I. The Weighted Average Cost of Capital and its Importance for Nike Inc.The Weighted Average Cost of Capita ...

(9 pages) 960 1 4.6 Oct/2006

Subjects: Businesss Research Papers > Case Studies > Clothing, Footwear and Cosmetics

Determining the Debt-Equity Mix: El Caf

ssets which will provide a substantial amount of money.Why is WACC Important to an Organization?The weighted-average cost of capital is the rate of return that the company must expect to earn on its a ... h their debt and equity) will decline.What Impact Does WACC Have on Capital Budgeting and Structure?Weighted average cost of capital is used to evaluate the project or to make capital budgeting decisi ...

(3 pages) 414 0 2.6 May/2007

Debt-Equity Mix Simulation

debt and equity components so that I could make investment decisions. The goal was to optimize the Weighted Average Cost of Capital (WACC) for the business so that I could lead the business to succes ...

(3 pages) 406 1 5.0 Sep/2007

Debt-Equity Mix Simulation Summary

of debt to equity plays an important role for a company to achieve a stable capital structure. The Weighted Average Cost of Capital (WACC) helps a company to find the appropriate proportion of debt a ... ix of debt and equity, a company is faced with many constraints to the availability of capital. The weighted average cost of capital is used to evaluate an action such as expansion and the debt-equity ...

(4 pages) 153 0 4.0 Nov/2007

Lester Electronics Financing Alternative Benchmark

f every company is to maximize shareholder's wealth as well as the company's revenues.Determine the Weighted Average Cost of CapitalThe weighted-average cost of capital (WACC) is a formula that helps ... ster to grow the company and become a major competitor in the globally market.Lester should use the Weighted-Average-Cost-of-Capital Method to value the merger project. The WACC approach begins with t ...

(25 pages) 286 0 4.0 Jan/2008

Dean's Foods Financials

that times interest earned has gone up, and that there is room for profit growth in the future.The Weighted Average Cost of Capital is the amount that the company must receive to actually add value i ... ssued at the same time of the issuance of the t-bill, that was used for the risk free rate.When the weighted average cost of capital was calculated, we found that it lowered the cost of capital to hav ...

(4 pages) 30 0 5.0 Feb/2008

Marriott Corporation: The Cost of Capital

tegies. Marriott measures the opportunity cost of capital for investments of similar risk using the Weighted Average Cost of Capital ("WACC"). The scope of this analysis is to assist Marriott in selec ...

(5 pages) 246 0 2.0 Apr/2008

Debt/Equity Mix Simulation

ital structure concepts addressed in this simulation. This paper will address the importance of the weighted-average cost of capital (WACC) to an organization, the impact of WACC on capital budgeting ... me of the other requests of the organization. As stated by Brealey, Myers, & Marcus (2007), the weighted-average cost of capital (WACC) is what the organization can expect as a return on investmen ...

(4 pages) 203 1 4.6 Apr/2008

Investment report on GOOG Company using DCF Model

Flow valuation of Google and arrived at an intrinsic value of $673.56. We used a beta of 1.24 and a Weighted Average Cost of Capital (WACC) of 11.43%. Finally, we have calculated three-stage free cash ...

(14 pages) 41 0 0.0 May/2008

Lester Electronics Financing Alternative Benchmarking MBA 540 week 5

and stock options, a combined strategy must be created. Financing considerations should include the weighted average cost of capital, the financial mix which can optimize capital, investment risks, an ... al, investment risks, and dividend policies.Weighted Average Cost of Capital (Cathy Billingslea)The weighted-average cost of capital (WACC) is a formula that helps a company determine the amount spent ...

(23 pages) 154 0 5.0 Feb/2009

Silicon Valley Medical Technologies Case Study

of this report discusses and analyzes the firms cost of capital. It begins with a discussion of the weighted average cost of capital (WACC) and the cost components that make it up. The cost components ... different levels of new financing.TABLE OF CONTENTSPageIntroduction to Cost of Capital 1Section 1: Weighted Average Cost of Capital (WACC) 1A.Debt 1B.Preferred Stock 2C.Common Stock 21.Capital Asset ...

(10 pages) 21 0 3.0 Jun/2009

Economic Value Added Application

e opportunity cost of the invested capital is computed by multiplying the Capital Invested from the Weighted Average Cost of Capital (WACC).EVE = NOPAT- Opportunity CostWhere,Opportunity Cost = Capita ...

(4 pages) 17 0 0.0 Jun/2010