Creating and Selling Securities to Finance
Not what you're looking for?
Because the weighted average given in the equation shown below is always a correct measure of a required return, why do firms not create securities to finance each project and offer them in the capital markets in order to accurately determine the required return for project?
Project Ahead
Initial ----------------------------------------------------------------------------------
1 2 3 4 5
years years years years years.
Purchase this Solution
Solution Summary
The solution discusses creating and selling securities to finance.
Solution Preview
Please refer to the attached file for the response.
Weighted Average
Because the weighted average is a correct measure of a required return, why do firms not create securities to finance each project and offer them in the capital market in order to accurately determine the required return for project?
Project Ahead
Initial ----------------------------------------------------------------------------------
1 2 3 4 5
years years years years years
Weighted average cost of capital manifests the combined costs of capital of all the company's sources of financing. They are normally expressed in after tax basis. According to Keown (2002), the weighted average cost of capital is the average of the after - tax costs of each of the sources of capital used by the firm to ...
Education
- Bachelor of Science in Business Administration, University of the Philippines
- Master in Business Administration, Saint Mary's University
- Doctor of Philosophy in Education, University of the Philippines
- Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
Recent Feedback
- "Excellent information thanks for the input"
- "Thank you"
- "Very thorough and informative. Thank you."
- "Good response. Very detailed"
- "This solution is excellent. Thank you"
Purchase this Solution
Free BrainMass Quizzes
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.