Do we utilize the historical costs of existing debt and equity to compute the cost of capital, or do we use the current costs as decided by the market to compute the cost of capital? Why?

Q: how the capital structure, cost of capital, and dividend decisions are related?

A: A dividend is a distribution of a portion of a corporation's earnings to a class of shareholders…

Q: What's the difference between the capital asset pricing model and modified capital assset pricing…

A: Capital Asset Pricing Model CAPM describes the relationship between systematic risk and expected…

Q: Are debtors calculated at selling price or finished goods price for net working capital? and why?

A: Net working capital means the difference between the current assets and current liabilities. Current…

Q: When placed in the context of looking at a company's capital structure, are there different…

A: Weighted Average Cost of Capital (WACC) is the rate at which the company is willing to pay to its…

Q: Why does a weighted average cost of capital suggest an optimal capital structure?

A:

Q: The cost of capital includes the cost of equity, the cost of long-term debt and the cost of accounts…

A: The capital of a corporation is the amount of money or funds that a corporation uses for operating…

Q: Discuss the concept of capital in terms of finance and the ways it is raised deliberately.

A: Capital is form finance.Money is raised through different resources and used for doing business over…

Q: Explain how the cost of capital serves as a screening tool when using the net present value method.

A: Definition: Net present value method: The net present value method is the method that is used to…

Q: . How are the component costs combined to forma weighted average cost of capital (WACC),and why is…

A: It is the discounted rate that has been calculated by the company on the basis of which present…

Q: How does the cost of equity based on internal funds differ from the cost of equity based on external…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: Required: . Use divided valuation model to obtain the cost of equity ii. Calculate after tax cost of…

A: Since you have posted a question with multiple subparts therefore, as per the guidelines we will…

Q: xplain how is cost of capital used to make financial decisions? Why do you think funds generated…

A: In capital budgeting, the cost of capital is used to select projects with higher profitability so…

Q: What do you understand by Financial Capital ? What is the difference between Financial capital and…

A: The Answer

Q: Why are capital market data and information useful when a firm is considering its cost of capital?

A: Capital costs are a valuable financial and accounting tool that can be used by corporations and…

Q: why is Capital Asset Pricing Model relevant

A: The Capital Asset Pricing Model, popularly known as CAPM, is an important model that is often used…

Q: How do we get the weighted average cost of capital if not given in the question?

A:

Q: Regarding the trade-off theory, capital structure is a trade-off between: O tangible and intangible…

A: The capital structure refers to the mix of various available sources of capital which is used by a…

Q: Why do we use the overall cost of capital for investment decisions even when only one source of…

A: The question is based on the concept of Financial planning.

Q: Define the term Paid-in capital?

A: Stockholders’ equity: Stockholders’ equity is referred to as the claims of the stockholders on the…

Q: Explain how the cost of capital may be used as a screening tool when applying the net present value…

A: Net present value: Net present value is a the increment return from an investment after covering the…

Q: On the basis of this information, what is LeCompte's optimal capital structure, and what is the…

A: Beta shows the relation between expected return of investment and systematic risk. CAPM use beta to…

Q: Question:  To estimate the cost of equity we can use the Capital Asset Pricing Model (CAPM) or the…

A: In the given question we need to answer the following question : To estimate the cost of equity we…

Q: a. What is STP's unlevered cost of capital? b. What is STP's after-tax debt cost of capital? c. What…

A: a) Total common stock value = 32 * 12 = 384 Total debt = 100 Total value = 384 + 100 = 484 Unlevered…

Q: Explain the relationship between the weighted average cost of capital (WACC), the maximization of…

A: Optimal capital structure of the firm explains the relationship between the weighted average cost of…

Q: Explain the difficulties for determining the cost of capital in the short term decision making.

A: Introduction: Capital structure relates to financing of the overall activities and development of a…

Q: Is this a right formula? Market Value of Equity = Market capitalization - cash and investment +…

A: Market value of equity and market capitalization are both same and is calculated as number of shares…

Q: The Capital Asset Pricing Model is the most important method for estimating the cost of capital that…

A: In this capital asset pricing model is commonly used in determining the cost of equity.

Q: Why should both quantitative and qualitative factors be considered in capital investment decisions?

A: The Investment commitment on any project is based on many factors which are classified as…

Q: Why is the after-tax cost of debt, rather than its before-taxrequired rate of return, used to…

A: The mix of equity and debt is a business organization is known as the capital structure of the…

Q: Why is working capital part of cash payouts in a capital investment, and what is its makeup?

A: The investment is an allocation and the commitment of the specific amount of funds to get the…

Q: Define the term Return on Common Equity? How does it measure profitability?

A:

Q: how was capital asset pricing model (CAPM) created? GIVE reference

A: Meaning CAPM Capital asset pricing model, It is created to explain the investor that he/she will get…

Q: Why is the cost of capital sometimes referred to as a “hurdle rate”?

A: Cost of capital is the cost of financing a business, investment or a project. Cost of capital is…

Q: Describe your understanding of the term "Financial Capital." When it comes to capital, what is the…

A: HERE IS THE ANSWER:

Q: Based on the given information, how much is the weighted average cost of capital?

A: Market value of ordinary shares = P 5 million Market value of long term debt = P 6.25 million Total…

Q: Why isn’t accounting net income used in the net present value method of making capitalbudgeting…

A:

Q: What is the Return on Invested Capital?

A: Return on invested capital is calculated or determined to know the efficiency of the company on…

Q: Discuss the Concept of capital in terms of finance comprehensively and the ways it is raised in…

A: Capital is basically a term for financial assets of a company, such as funds held in deposit or…

Q: What is the weighted average cost of capital (WACC), and how is it calculated? Kindly answer ASAP

A: WACC is the combined return demanded by both equity and debt holders.

Q: Using the free cash flow valuation model, identify avenues by which capital structure can affect the…

A: According to second preposition of the Modigliani and Miller approach, value of firm changes due to…

Q: What is Capital Asset Pricing and is it better then Dividend Valuation Model? If yes, on what…

A: The capital asset pricing model is an extension of the portfolio theory of Markowitz. It derives the…

Q: Profitability index: What is the profitability index, and why is it helpful in the capital rationing…

A: