QuickHelper

(10)

$20/per page/

About QuickHelper

Levels Tought:
Elementary,High School,College,University,PHD

Expertise:
Accounting,Applied Sciences See all
Accounting,Applied Sciences,Business & Finance,Chemistry,Engineering,Health & Medical Hide all
Teaching Since: May 2017
Last Sign in: 353 Weeks Ago, 4 Days Ago
Questions Answered: 20103
Tutorials Posted: 20155

Education

  • MBA, PHD
    Phoniex
    Jul-2007 - Jun-2012

Experience

  • Corportae Manager
    ChevronTexaco Corporation
    Feb-2009 - Nov-2016

Category > Business & Finance Posted 07 Jun 2017 My Price 13.00

Cost of Capital

Question description

 

Christopher William, president of William Industries which produces widgets, has hired you to determine its cost of debt and the cost of equity capital.  The stock currently sells for $25 per share and the dividend will be $5.  Christopher argues that it will cost us $5 per share to use the stockholders money this year therefore the cost of equity is equal to 20%.  Furthermore, Christopher believes that the cost of debt is 25%.  This is based upon the most recent financial statements which show that William Industries has total liabilities of $10 million and will face total interest expenses for the year of $2.5 million.  Christopher argues that the company should increase its use of equity financing because debt costs 25% while equity only costs 20% and thus equity is cheaper.  Is Christopher’s analysis of the cost of equity, debt, and decision to increase the use of equity financing over debt financing accurate?  Defend your answers in a 500 to 750 word report and cite your sources. 

Answers

QuickHelper
(10)
Status NEW Posted 07 Jun 2017 02:06 PM My Price 13.00

Hel-----------lo -----------Sir-----------/Ma-----------dam----------- T-----------han-----------k Y-----------ou -----------for----------- us-----------ing----------- ou-----------r w-----------ebs-----------ite----------- an-----------d a-----------cqu-----------isi-----------tio-----------n o-----------f m-----------y p-----------ost-----------ed -----------sol-----------uti-----------on.----------- Pl-----------eas-----------e p-----------ing----------- me----------- on----------- ch-----------at -----------I a-----------m o-----------nli-----------ne -----------or -----------inb-----------ox -----------me -----------a m-----------ess-----------age----------- I -----------wil-----------l

Not Rated(0)
Relevent Questions