FINANCIAL MANAGEMENT

 

 

 

FNCE 623: Week 7 Assignment

 

Below, I am including your week seven assignment from the Chapter 14 Cost of Capital material. I also included an audio file in the Week Seven classroom where I discuss cost of capital and why companies use it.

 

Assignment for Week Seven Fact Situation

 

The CFO for company X (an exchange traded company) has asked you to compute the company’s cost of capital.

 

The CFO provides you with the following information:

  1. 5 Million Shares outstanding and X’s stock currently trades at $25 per share.
  2. Interest Bearing Debt with each bond issued at $1,000 per bond (currently trading at $1,000 per bond) with 75,000 bonds issued and outstanding. Each bond pays 5% interest rate, and X pays taxes at 25% effective rate.
  3. Investors wish to earn 15% to invest in X company stock.

 

Compute X’s Cost of Capital from the above fact situation. You can turn in one word file for this assignment.

 

Below, I am including your assignment from Chapter 15 Venture Capital. I have included an audio file discussing this subject.

 

Draft 250 to 350 words discussing the venture capital process with the potential upside and downside company founders may anticipate as they use venture capital funding. Here, I am looking for why founders may see different results (in general terms) depending on how well their company does.

 

Class, you can turn in this two-part assignment in one word file or one excel file. Thus, you want to turn in only one file total for the week seven assignments – thanks.

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