Question

What a Global Cost is and what it means to have availability of Capital? What is...

What a Global Cost is and what it means to have availability of Capital?

What is WACC and why is it an important measure?

What does knowing your company's WACC allow a firm to do?

What are some motives and alternative instruments to source equity globally?

Is there optimal capital structure for multinationals?

Homework Answers

Answer #1

Solution 1

The global cost and availability of capital depends on how a firm gains liquidity for its equity and debt securities on international standards rather than domestic conditions. In other words, this means what strategies a firm uses to attract international investors to invest in the business operations and thereby escape the limitations of segmented and illiquid domestic market. While going for international fund raising, firms consider international marginal cost of capital and compare the same across countries.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. What is WACC and why is it an important measure? 2. What does knowing your...
1. What is WACC and why is it an important measure? 2. What does knowing your company's WACC allow a firm to do? 3. What are some motives and alternative instruments to source equity globally? 4. Is there optimal capital structure for multinationals?
What is a weighted average cost of capital (WACC), and what is a target capital structure?...
What is a weighted average cost of capital (WACC), and what is a target capital structure? What is the project cost of capital and how does it differ from the WACC? Should a company use the cost of the specific source of funding for a project or the WACC as its basis for evaluating the project?Explain your answer. What factors affect a company’s weighted average cost of capital? Define operating leverage and financial leverage. How does each relate to risk?...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the...
The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings...
Weighted Average Cost of Capital (WACC) 1 In its 2017 10-k Black Diamond Equipment reported the...
Weighted Average Cost of Capital (WACC) 1 In its 2017 10-k Black Diamond Equipment reported the following information about its capital structure. The firm had long term public debt outstanding of 500 million dollars and short term debt of 31.5 million dollars. It's average cost of debt was 8.25%. The firm had 10 million public shares outstanding and each share was currently trading for $84.75. It's cost of equity was 15.6%. The firms current marginal tax rate was 35%. What...
WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F....
WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of low interest rates and the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: Market Debt- to-Value Ratio (wd) Market Equity-to-Value Ratio (ws) Market Debt- to-Equity Ratio (D/S) Before-Tax Cost...
WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F....
WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but it would like to add some debt to take advantage of the tax shield. Its investment banker has indicated that the pre-tax cost of debt under various possible capital structures would be as follows: Market Debt-to- Value Ratio (wd) Market Equity-to- Value Ratio (ws) Market Debt-to Equity Ratio (D/S) Before-Tax Cost of Debt (rd)...
AVERAGE COST OF CAPITAL 17. Given the following data, compute the weighted average cost of capital...
AVERAGE COST OF CAPITAL 17. Given the following data, compute the weighted average cost of capital (WACC). Components of capital structure                        After Tax Cost Debt                 $65 million                                          6.5% Preferred Stock     35 million                                         10.5%              Common Equity    60 million                                        12.75% Total                160 million If the return on assets of the corporation is 13% on an annual basis, calculate its profitability and economic value added, EVA. 18. Provide an explanation or the rationale for the cost of capital (average or overall...