L_19_ - Outline Lecture 19 Organization Optimal Capital...

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Outline Lecture 19 Organization Optimal Capital Structure Capital Restructuring Home-made leverage Cost of levered Equity
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The Weighted Average Cost of Capital The weighted average cost of capital ( WACC) —is overall return the firm (the project) must earn on its assets WACC = The WACC is the required return on the firm as a whole. If the risk (or beta) of an new investment project is below (above) the company's WACC, then in order to calculate appropriate discount rate _______
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Capital Structure, Cost of Capital, and the Value of the Firm What is the optimal capital structure? Optimal capital structure Why
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Capital Structure, Cost of Capital, and the Value of the Firm Why
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Capital Structure, Cost of Capital, and the Value of the Firm Capital structure is flexible Capital restructuring
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Impact of Fin. Leverage on Earnings per Share (EPS) and Return on Equity (ROE) A proposed change in financial leverage: Current Assets $5,000,000 Debt $0 Equity $5,000,000 Debt/equity ratio
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This note was uploaded on 06/22/2011 for the course FINA 365 taught by Professor Koch during the Spring '08 term at South Carolina.

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L_19_ - Outline Lecture 19 Organization Optimal Capital...

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