Question 1: $100 This general type of debt capital should not be included in the

Question

Question 1: $100 This general type of debt capital should not be included in the calculation of a firm's WACC, since it generally does not represent a permanent source of financing for most U.S. companies What is Question 2: $200 What are The availability of the data in a firm's financial statements, their use by bond rating agencies and security analysts, and their stability over time provide strong support for the use of these weights in the WACC calculation Question 3: $300 This is the combination of debt, preferred stock, and common equity that maximizes the value of the firm's common stock What is the Question 4: $400 Of the three major methods used to generate an estimate of a firm's cost of common equity, this method is generally used by non-publicly-traded companies What is a(n) Question 5: $500 What is This is the range of the judgmental risk premium usually added to the expected future yield of a firm's bonds to generate a judgmental estimate of the cost of the same firm's common stock

Explanation / Answer

1.

Short term debt

2.

Market weight

3.

Target capital structure

4.

Capital asset pricing model or Dividend Discounting method

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