\n<\/p>\n

<\/p>\n

Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas.<\/p>\n

Mary Francis has just returned to her office after attending preliminary discussions with investment bankers. Her last meeting regarding the intended capital structure of Apix went well, and she calls you into her office to discuss the next steps.<\/p>\n

\u201cWe will need to determine the required return for our intended project so that we have a decision criteria defined for the project,\u201d she says.
\u201cDo you have the information I need to describe capital structure and to calculate the weighted average cost of capital (WACC)?\u201d you ask.
\u201cI do,\u201d she smiles. \u201cWe can determine the target WACC for Apix Printing Inc., given these assumptions,\u201d she says as she hands you a piece of paper that says the following:<\/p>\n

\n
• Weights of 40% debt and 60% common equity (no preferred equity)<\/li>\n
• A 35% tax rate<\/li>\n
• Cost of debt is 8%<\/li>\n
• Beta of the company is 1.5<\/li>\n
• Risk-free rate is 2%<\/li>\n
• Return on the market is 11%<\/li>\n<\/ul>\n

  \u201cGreat,\u201d you say. \u201cThanks.\u201d
  \u201cBe sure to indicate how these costs of capital might be used to determine the feasibility of the capital project,\u201d Mary says. \u201cI want your recommendation about which is more appropriate to apply to project evaluation, too. Let me know what you think.\u201d
  \u201cOne more thing,\u201d she says as she stands up to signal the end of the meeting. \u201cYou did a good job with the explanations that you provided Luke the other day. Would you have time to define marginal cost of capital<\/em> for me so I can include it in my discussions with investors? You seem to have a knack for making things accessible to nonfinancial folks.\u201d
  \u201cNo problem,\u201d you say. \u201cI\u2019m glad my explanations are so useful!\u201d<\/p><\/blockquote>\n

  For this assignment, complete the following:<\/p>\n

  \n
  • Describe capital structure.<\/li>\n
  • Determine the WACC given the above assumptions.<\/li>\n
  • Indicate how these might be useful to determine the feasibility of the capital project.<\/li>\n
  • Recommend which is more appropriate to apply to project evaluation.<\/li>\n
  • Define marginal cost of capital<\/em>.<\/li>\n<\/ul>\n

    Please submit your assignment. Please include references.<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas. Mary Francis has just returned to her office after attending preliminary discussions with investment bankers. Her last meeting regarding the intended capital structure of Apix went well, and she calls you into her […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_joinchat":[]},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts\/265122"}],"collection":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/comments?post=265122"}],"version-history":[{"count":1,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts\/265122\/revisions"}],"predecessor-version":[{"id":272909,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/posts\/265122\/revisions\/272909"}],"wp:attachment":[{"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/media?parent=265122"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/categories?post=265122"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qualityassignments.net\/wp-json\/wp\/v2\/tags?post=265122"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}