When discounting Free Cash Flow to Firm (FCFF), should the Weighted Average Cost of Capital (WACC) be pre-tax or post-tax?

Q: Briefly explain why we refer to the opportunity cost of capital, instead of just “cost of capital”…

A: A cost of capital is referred to as the opportunity cost of capital as it is an opportunity for us…

Q: Why might the weights of capital be different depending on whether book values,market values, or…

A: The weights of the capital should be different for book values of a equity, market value of a…

Q: When estimating a weighted average cost of capital, a firm can use either book values or market…

A: Introduction: WACC is nothing but weighted average cost of capital. This is the cost a company…

Q: Does the PW method assume that the interest rate charged to any fundswithdrawn from a firm's…

A: The question is based on the concept of present worth calculation of any fund in investment…

Q: weighted-average cost of capital

A: Weighted average cost of the capital represents the rate on which the company would be paying to…

Q: What is the dividend payout’s impact on the need of Internal and external funds?

A: Dividend Payout ratio:- This proportion is given as a percentage and is calculated by dividing a…

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: In comparison to free cash flow valuation, what's the main issue with dividend valuation?

A: Dividend discount model is a DCF model which assumes that the price of a stock should be equal to…

Q: In calculation of weighted average cost of capital, is trades payable included?

A: Trade payable- Amount that is payable by a firm  for goods purchased or services availed and it…

Q: When comparing levered vs unlevered Capital structures why does leverage work to increase FPS for…

A: There can be two types of firms based on their capital structure. The firm which is completely…

Q: If a company has over capitalization, rate of earning is: Select one: a. equal with the rate of…

A: In case of over capitalization, a company issues more debt and equity as compared to the worth of…

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: Provide a brief overview of capital structure effects.  Be sure to identify the ways in which…

A: Answer: The effect of value of capital structure depends on the effect on the debt on weighted…

Q: Which of the following is NOT a capital component when calculating the weighted average cost of…

A: WACC (discount rate) refers to the joint cost of company's capital from all the sources of the…

Q: What is calculation of before Tax (Equity) Cash Flow?  Please provide example.

A: The cash flow, which is generated by an investment after deducting all payments of all expenses from…

Q: Why are market-based weights used instead of book-value-based weights when computing the weighted…

A: Market value is that present worth of the firm or any resource in the market on which it tends to be…

Q: When computing the weighted average cost of capital, which of these are adjusted for taxes? OCost of…

A: WACC or weighted average cost of Capital, it determines the cost associated with each part of…

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

A:

Q: In computing the cost of capital, do we use the historical costs of existing debt and equity or the…

A: WACC is cost incurred by entity to finance its capital structure. It is sum of weighted individual…

Q: Discuss whether the dividend growth model or the capital asset pricing model should be used to…

A: The dividend growth model and the capital asset pricing model are both methods that can be used to…

Q: Which of the following is typically not treated as one of the components of capital in cost of…

A: The balance sheet is one of the important financial statements of the business. It represents the…

Q: How to determining optimal capital structure?

A: Optimal Capital Structure: It is the best debt and equity mix financing that minimizes the cost of…

Q: Which of the following is generally excluded in estimating the weighted average cost of capital? a.…

A: Weighted Average Cost of Capital is a weighted average of the components costs of long-term debt,…

Q: Under the moderate view of capital structure theory, explain the relationship that exists between a…

A: The relationship between a company's capital structure and its weighted average cost of capital is…

Q: 1.Describe the components included in weighted average cost of capital. How do you determine a…

A: WACC or weighted average cost of capital is an important metric in finance. We often use WACC in…

Q: Explain Net Income versus Cash Flow?

A: Definition: Statement of cash flows: This statement reports all the cash transactions which are…

Q: Define the term Paid-in capital?

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

Q: How firm calculate their cost of capital

A: The cost of capital is the rate of return that a company must earn on its investments to satisfy the…

Q: Is cost of capital set by investors or managers?

A: Cos of capital (Coc) is rate of return required to make capital budgeting decisions for example,…

Q: Discuss the Weighted Average Cost of Capital (WACC). Why do firms calculate their weighted average…

A: WACC- Weighted average cost of capital (WACC) is the rate that a company is expected to pay on…

Q: The weights used in calculating the weighted average cost of capital should be based on ___

A: The Answer:

Q: What is net operating working capital? Why does it exclude mostshort-term investments and notes…

A: Introduction: Working capital is the capital of company that is used in its day-to-day operational…

Q: Which one of the following represents the capital gains yield as used in the dividend growth model?

A: The formula for the dividend growth model is: P0 = d1/(r-g) where d1 is the next expected dividend r…

Q: Can the net cash flows be viewed as before-tax values or aftertax values for which tax effects have…

A: Cash flow after taxes (CFAT) investigates the capacity of an organization to deliver income from its…

Q: Whats is the sum of the expected dividend and the capital gains yield called

A: total yield = capital yield + dividend yield

Q: Using your own words, briefly (hopefully) explain: (a). What is "retained earning"? How does…

A: Profit earning is the main and basic motive of every firm or business. Businesses use these profits…

Q: Does weighted average cost of capital is similar to Cost of Capital?

A: Cost of capital refers to the return expected by the company for making investments in projects or…

Q: Explain what the weighted average cost of capital for a firm is and why is it often used as a…

A: The Weighted Average Cost of Capital (WACC) is a financial metric used to measure a company's cost…

Q: Do we utilize the historical costs of existing debt and equity to compute the cost of capital, or do…

A: The Answer

Q: Which one of the following is an internal characteristic that can affect the value of an investmen…

A: Internal Characteristics mean factors within the organization. It excludes political events,…