Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.

Tags

#cfa-level-1 #corporate-finance #reading-36-cost-of-capital

Question

Suppose Gewicht announces that a debt-to-equity ratio of 0.7 reflects its target capital structure. What weights should Anziell use in the cost of capital calculations?

Answer

A debt-to-equity ratio of 0.7 represents a weight on debt of 0.7/1.7 = 0.4118 so that *w*_{d} = 0.4118 and *w*_{e} = 1 − 0.4118 = 0.5882. These would be the preferred weights to use in a cost of capital calculation.

Tags

#cfa-level-1 #corporate-finance #reading-36-cost-of-capital

Question

Suppose Gewicht announces that a debt-to-equity ratio of 0.7 reflects its target capital structure. What weights should Anziell use in the cost of capital calculations?

Answer

?

Tags

#cfa-level-1 #corporate-finance #reading-36-cost-of-capital

Question

Suppose Gewicht announces that a debt-to-equity ratio of 0.7 reflects its target capital structure. What weights should Anziell use in the cost of capital calculations?

Answer

A debt-to-equity ratio of 0.7 represents a weight on debt of 0.7/1.7 = 0.4118 so that *w*_{d} = 0.4118 and *w*_{e} = 1 − 0.4118 = 0.5882. These would be the preferred weights to use in a cost of capital calculation.

status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
---|---|---|---|---|---|---|---|

repetition number in this series | 0 | memorised on | scheduled repetition | ||||

scheduled repetition interval | last repetition or drill |

Do you want to join discussion? Click here to log in or create user.