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Goodwill included in Computation of ROIC

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8. When should goodwill be included in the computation of ROIC?

10. What is the basis for using the company's target capital structure versus the current capital structure when estimating WACC?

1. What are the components of capital? How do they differ from each other in terms of business value and the common shareholder's interest?

4. Assume we've gone through a substantial period of high interest rates. How does this affect the interpretation of the values on the asset side of the balance sheet?

11. How would inflation affect the determination of the WACC, assuming significant inflation?

15. What is the meaning and significance when a firm has to resort to the use of so-called junk debt to raise capital?

16. What additional risks are involved with the raising of debt capital from foreign investors?

17. Outline the Capital Asset Pricing Model (CAPM). Explain the significant elements.

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Solution Summary

The solution examines when Goodwill should be included in the computations of ROIC. an outline of the Capital Asset Pricing Model is provided.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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