Managing Projects College Essay

College
Essay
Miscellaneous
Pages 8 (2008 words)
Download 0
weighted average cost of capital is an expression used to evaluate whether taking a certain course of action would be worth, this is because a company creates value of its share holders by adding value on there capital beyond their original contribution therefore necessitating the calculation of WACC.

Introduction


Calculation of WACC is not a simple task as many would think, this is because the only part which is simple is calculation of the debt a firm has, these debt include the bank loan and other borrowing, however this is usually the beginning of the hard task since it known that the equity finance is usually more expensive than cost debt finance, this is due to the fact that equity finance has complex computation of the risk premium making computation of WACC complex. This computation of WACC is made more complex when determining which debts or equity should be used to increase the returns on capital of the share holders. The inclusion of corporate tax- rate in this computation adds more trouble while calculating WACC in view of the fact that interest payment is taxable.
From the above facts, I would not agree with the statement that calculation of the WACC is the easiest thing in the world because even though the formulae appears simple it cannot be interpreted in lay mans language, e.g. ...
Download paper
Not exactly what you need?

Related papers

College education and its role in life
Throughout my student and personal life, I have approached all projects and plans with passion, and I believe it is this passion that has allowed me to enjoy what I do and subsequently to do them well. Entering college, I will continue to pursue my passion for graphic designing, and I have no doubt that the proper academic guidance from an established institution will steer me towards a fulfilling…
Managing Finance College Essay
The supervisor salary cost becomes double at this level. The variable cost increase proportionately and other production cost also increase. Hence, the cost per unit increases, which will affect the profits for the company. …
Managing Projects College Essay
Calculation of WACC is not a simple task as many would think, this is because the only part which is simple is calculation of the debt a firm has, these debt include the bank loan and other borrowing, however this is usually the beginning of the hard task since it known that the equity finance is usually more expensive than cost debt finance, this is due to the fact that equity finance has complex…
Managing New Media Projects
It has been contended that the surfacing of novel, digital technologies hinted a fundamental shift of who is in control of information, experience and resources (Croteau and Hoynes 2003, p. 322). Likewise, it was inferred that new media will: 1) change the implication of geographic distance; 2) facilitate massive swelling in the volume of communication; 3) offer prospects of increased speed in…
Problems Associated with Rise of English as a World Language
The grim situations arising from the conquerors-vanquished relationships continued to cast their shadows across the continents and societies that began learning the new language of the British. Military expeditions, business misunderstandings or plain local native skirmishes did see exchange of views, albeit impolite, that showed the level of mastery over the new language by the vanquished or the…
Project Management Managing Projects
This relation is shown in the Network diagram by two rectangles "a" and "b" joined by a directed line going from "a" to "b". This helps the user in tracing all tasks on which a particular task is dependent and in tracing all the tasks which depend on a particular task. It also helps the user in estimating the criticality of a task.…
Managing Projects Essay
Manipulating and analysing data help the managers to manage the projects and funds.…