A company has 100 million shares outstanding trading for $5 per share. It also has $600 million in outstanding debt. If its equity cost of capital is 12%, and its debt cost of capital is 10%, and its effective corporate tax rate is 40%, what is its weighted average cost of capital?
Unit 4 Discussion: Are Credit Cards Money?
One of the factors of production is capital – money. People and companies use and manipulate money - generally to create more money or to use what money they have as efficiently as possible. People - investors and founders and owners - put money and capital into a business. A company uses this money to build its business model.
Companies and people need to know whether they are making a profit or a loss, how much they owe, how much they own. Just like a company, we need to know if we are using our money wisely and efficiently. We need to keep track of the money we spend and what we owe. We need to know how we are performing over time. We need to know our own personal assets, our liabilities, and how much equity we have and are building.
For example, many of us are using student loans to build our own business model. We're investing in ourselves, in our future. Even though we have to repay these loans, this is a good investment.
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Our discussion for this week looks deceptively simple but it is really complex. You have a young friend who has never had credit. This person does not really want credit and is doing fine paying cash for everything. However, there is a problem: your friend wants to get a home mortgage in two years. Devise a strategy for your friend of sensibly building consumer credit for a mortgage lender to evaluate.
Book is Bodie, Kane and Marcus: "Essentials of Investment"
detail in attachments， data is not complete, if you need it, please contact me
1.Word Count guidance:2000 words
2.Type of Assignment: Business Report.
3. Make use of reference,where appropriate,useHarvard or APA referencing method.
Prepare: View the
Globalization: What is Happening to Us? video and read the article
A Model of Global Citizenship: Antecedents and Outcomes by Stephen Reysen and Iva Katzarska-Miller (2013). Go to the Ashford Library and locate one additional source on global citizenship that will help support your viewpoint.
Reflect: Please take some time to reflect on how the concept of global citizenship has shaped your identity, and think about how being a global citizen has made you a better person in your community
Write:
What is the difference between a cost and an expense? When does a cost become an expense? Do all costs become expenses? Explain
A company is experiencing lower than expected sales. The company’s executives agreed that in order to make up some of the lost revenue’s impact on the bottom line, expenses must be lower. One of the expenses to reduce was equipment that was purchased for $4,400,000 two years ago and which was estimated to have a useful life of eight years and a salvage value of $400,000. The company uses straight line deprecation, therefore, the company has recorded accumulated depreciation of $1,000,000 to date.
The executives want the estimated useful life changed from eight to 12 years so that depreciation expense will be reduced. The argument is that the useful life was just an estimate and by changing it the company can be aligned with the industry since some competitors in the industry also use 12 years’ useful life.
- Identify the stakeholders in the case.
- Determine whether the proposed change in assets’ useful life is unethical or good business practice.
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Deliverable Length: 800–1,000 words
Understanding how to properly value a vanilla bond (a plain bond) is essential for finance. Using the following: https://www.auctions.zionsdirect.com/ find 3 different funding structures. Describe for each structure: security type, term, and yield. Furthermore, take a look at each of their offering documents, and provide a short description of the information found in the documentation.
- Why do the different types of bonds get different rates? Explain your answer.
- What makes each of the different structures different? Explain your answer.
- What does the rate given say about the credit rating for each issuer? Explain your answer.
Lee Manufacturing
Capital Budgeting Analysis
In 2004 David Lee started Lee Manufacturing, a company dedicated to manufacturing simple yet efficient gas barbecues. The barbecues are made of aluminum and stainless steel and are priced at the middle of the market. David’s goal has always been to make a barbecue that cooks great food. This means, good quality parts, simple construction, even heat, no hot or cold spots, and a barbecue that will hold temperature from the lowest setting to the highest setting. David’s motto is “high quality for a fair price”. The company offers four basic grill sizes (models) and several options and accessories that can be added on to each model. Lee’s barbecues have been well received. Revenue and profits have grown steadily.
Based on the recommendation from his sales and marketing department Mr. Lee is considering broadening his product line by adding a new product line of Lee charcoal barbecues
