Assignment 2: Risk Analysis

1. Determine the cost of debt and equity for your chosen US publicly traded company using the techniques presented in chapters 5 and 6 of your textbook, ;The portable MBA in finance and accounting ;(4th ed.). Show your work. ;
2. Determine what the weighted average cost of capital (WACC) is for your chosen company. ;

   In 300 words or less explain why the weighted average cost of capital is important to managers, investors, and creditors of the company. ;

3. Determine what, in your opinion, the optimal mix of debt and equity is for your company. What benefits should an optimal mix produce for shareholders (owners)? Explain in detail. ;

Write a 2-page research paper. Apply APA standards to citation of sources.

• From the Internet: *THESE ARE RESOURCES YOU CAN USE IF IT APPLYS TO ASSIGNMENT*
  • Financial sites to review and become familiar with: ;
    • Moneychimp: learn Stock Investing, Index Funds, Valuation Models, and more. ;http://www.moneychimp.com/
    • The Concise Encyclopedia of Economics ;http://www.econlib.org/library/CEETitles.html
    • Investopedia – Educating the world about finance ;http://www.investopedia.com/?viewed=1
    • Calculating the Weighted Average Cost of Capital (WACC) for a Company ;http://business.fullerton.edu/finance/mstohs/CalculateWACC.htm
    • miniwebtool.com’s CAPM (Capital Asset Pricing Model) Calculator ;http://www.miniwebtool.com/capm-calculator/

Submission Details:

• By ;Wednesday, November 4, 2015, save your report as M2_A2_lastname_firstinitial.doc and upload to the ;M2: Assignment 2 Dropbox. ;