Capital projects, which make up the long - term asset portion of the balance sheet, can be so large that sound capital budget-ing decisions ultimately decide the future of many corporations. 2 Answers to Question 1 - Weighted Average Cost of Capital (WACC). Cost of capital is a weighted average of the returns expected by all . Weighted average cost of capital = 15,100/1,30,000 x 100 = 11.61%. d. The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC. Its current earnings are Rs. COST OF CAPITAL Answers to Concepts Review and Critical Thinking Questions 1. the sum of outstanding debt, preferred stock, and common equity. (viii) Cost of debt and Cost of Pref. Question 31(a) This question required candidates to calculate the after-tax weighted average cost of capital (WACC) of the company, where there were four distinct sources of finance. ... As the equity cost of capital decreases from 14.72% to 12.56%, Telmex will experience an increase in its 43 0 obj
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