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What sources of long-term capital do firms use

MikeCarlo
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What sources of long-term capital do firms use

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    1. What sources of long-term capital do firms use?

    10. Total assets:  $return:    New EPS:  

    12. How are the weights determined? WACC = wdkd(1-T) + wpkp + wcks Use accounting numbers or market value (book vs. market weights)? Use actual numbers or target capital structure?

    18. Should the company use the composite WACC as the hurdle rate for each of its projects? NO! The composite WACC reflects the risk of an average project undertaken by the firm. Therefore, the WACC only represents the “hurdle rate” for a typical project with average risk. Different projects have different risks. The project’s WACC should be adjusted to reflect the project’s risk.

    19. Risk and the Cost of Capital

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