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Financial Management - Finance Chapter 9

Autor:   •  May 22, 2016  •  Course Note  •  559 Words (3 Pages)  •  499 Views

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Financial management 3 2016

Tutorial chapter 9

___________________________________________________________________________

Question 7

WACC

= (We x Ke) + (Wd x Kd) + (Wp x Kp)

Question 8

a WACC

b Based on the information given, the company would like to be financed by 60% equity and 40% debt. From the above, it can be seen that the company is being over-financed by equity. Also, the preference shares to bond target is 50:50 which is quite close to what is being achieved currently. Based on the current WACC, the company should consider undertaking this investment opportunity since the return is greater than the WACC.

Question 10

Financial management 3 2016

Tutorial chapter 9

___________________________________________________________________________

Question 7

WACC

= (We x Ke) + (Wd x Kd) + (Wp x Kp)

Question 8

a WACC

b Based on the information given, the company would like to be financed by 60% equity and 40% debt. From the above, it can be seen that the company is being over-financed by equity. Also, the preference shares to bond target is 50:50 which is quite close to what is being achieved currently. Based on the current WACC, the company should consider undertaking this investment opportunity since the return is greater than the WACC.

Question 10

Financial management 3 2016

Tutorial chapter 9

___________________________________________________________________________

Question 7

WACC

= (We x Ke) + (Wd x Kd) + (Wp x Kp)

Question 8

a WACC

b Based on the information given, the company would like to be financed by 60% equity and 40% debt. From the above, it can be seen that the company is being over-financed by equity. Also, the preference shares to bond target is 50:50 which is quite close to what is being achieved currently. Based on the current WACC, the company should consider undertaking this investment opportunity since the return is greater than the WACC.

Question

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