# Capital Structure : key information

Suppose K Corporation's projected free cash flow for next year is $100,000, and FCF is expected to grow at a constant rate of 6%. If the company's weighted average cost of capital is 11%, what is the value of its operations? Is it 2,000,000 or 2,100, 000?

Provide a brief overview of capital structure effects. Please be sure to identify the ways in which capital structure can affect the weighted average cost of capital and free cash flows.

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#### Solution Preview

Value of Operations= Free cash flow of Next year /(WACC-Growth rate)

=100000/(11%-6%)

$2,000,000.00

Hence its $2000000

Provide a brief overview of capital structure effects. Please be sure to identify the ways in which capital structure can affect the weighted average cost of capital and free cash flows.

A firm's optimal ...

#### Solution Summary

Key information for capital structure are analyzed for K Corporation. A Brief overview of capital structure effects is determined.