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A firm's cost of capital reflects both its cost of capital and its cost of capital.
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- Under the moderate view of capital structure theory, explain the relationship that exists between a company's capital structure and its weighted average cost of capitalExplain how firms choose between sources of capital. Explain clearly with characteristics of each capital source.What is the difference between the Company cost of capital and project cost of capital?
- What is working capital? How does working capitalrelate to the operating cycle?a. What is a firm's cost of capital? b. Why is the company's cost of capital important in financial decisions?Explain why the required rate of return on a firm's assets must be equal to the weighted average cost of capital associated with its liabilities and equity. Explain using the concepts from the course.
- What is meant by capital structure, what are the characteristics of it's main components, and how that may affect a company solvency?Explain some of the factors that can affect the cost of capital and describe whether or not it is something that a company can control.Discuss the Weighted Average Cost of Capital (WACC). Why do firms calculate their weighted average cost of capital?
