Tuesday 4 November 2014

FIN 370 Week 4 Complete

FIN 370 Week 4 Complete

DQ 1. What are main elements in calculating the cost of capital? How would an increase in debt affect it? How would you identify an organization’s optimal cost of capital?

DQ 2. What is meant by WACC? What are some components of WACC? Why is WACC a more appropriate discount rate when doing capital budgeting? What is the effect on WACC when an organization raises long-term capital?

DQ 3. What is an IPO? How does an IPO allow an organization to grow financially? When is a merger or an acquisition, instead of an IPO, more appropriate?

Prepare a response to the Caledonia Products Mini-Case located near the end of Chapter 12 in Financial Management.
 Formulate answers to questions 1–7.
 Describe factors Caledonia must consider if it were to lease versus buying.
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