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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