A company that has both debt and equity in its capital structure will use its weighted average cost of capital (WACC) as its discount rate. Based on your understanding of the weighted average cost of capital, complete the following statements: • In general, the the risk of a firm as perceived by its existing and potential investors, the greater is the firm’s weighted average cost of capital (WACC). • The calculation of a firm’s weighted average cost of capital should be based on the after-tax cost of the dollar of financial capital raised. • It is generally believed that the proportions, or weights, used in the calculation of a firm’s weighted average cost of capital should be based on the market values of the firm’s capital sources. This is because the market value weighting system is more consistent with maximizing the value of the firm’s . True or False: Although the use of market value weights is theoretically superior to the use of book value weights in the calculation of a firm’s weighted average cost of capital (WACC), firms often use book value weights due to their relative stability compared to the daily changes in market values. True False True or False: A firm’s new investments, existing assets, and capital structure affect its overall degree of risk and, in turn, its weighted average cost of capital (WACC). True False

If his parents cannot alex with college, and two of his scholarships will be awarded to other students if he does not accept them immediately, which is the best option for him?

Instructions: use the following information to construct the 2000 balance sheet and income statement for carolina business machines. round all numbers to the nearest whole dollar. all numbers are in thousands of dollars. be sure to read the whole problem before you jump in and get started. at the end of 1999 the firm had $43,000 in gross fixed assets. in 2000 they purchased an additional $14,000 of fixed asset equipment. accumulated depreciation at the end of 1999 was $21,000. the depreciation expense in 2000 is $4,620. at the end of 2000 the firm had $3,000 in cash and $3,000 in accounts payable. in 2000 the firm extended a total of $9,000 in credit to a number of their customers in the form of accounts receivable. the firm generated $60,000 in sales revenue in 2000. their cost of goods sold was 60 percent of sales. they also incurred salaries and wages expense of $10,000. to date the firm has $1,000 in accrued salaries and wages. they borrowed $10,000 from their local bank to finance the $15,000 in inventory they now have on hand. the firm also has $7,120 invested in marketable securities. the firm currently has $20,000 in long-term debt outstanding and paid $2,000 in interest on their outstanding debt. over the firm's life, shareholders have put up $30,000. eighty percent of the shareholder's funds are in the form of retained earnings. the par value per share of carolina business machines stock is

Interest is credited to a fixed annuity no lower than the variable contract rate contract guaranteed rate current rate of inflation prime rate