AMAZON COMPANY Questions 1. What are the different kinds or types of financing t

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AMAZON COMPANY

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1. What are the different kinds or types of financing that this company has used to raise funds? What are the weights of debt and equity?

2. What is the cost of debt, cost of equity and cost of capital for the firm?

3. How large, in qualitative or quantitative terms, are the advantages to this company from using debt? How large, in qualitative or quantitative terms, are the disadvantages to this company from using debt? From the qualitative trade off, does this firm look like it has too much or too little debt?

4. Does your firm have too much or too little debt relative to its sector and relative to the market?

5. If your firm's actual debt ratio is different from its "recommended" debt ratio, how should they get from the actual to the optimal? In particular, should they do it gradually over time or should they do it right now? should they alter their existing mix (by buying back stock or retiring debt) or should they take new projects with debt or equity? and What type of financing should this firm use? In particular, should it be short term or long term? what currency should it be in? and what special features should the financing have?

Explanation / Answer

1.Debt equity ratio = debt/ equity

It is kept as 2:1

2. Cost of capital is the amount refund by various kinds of investment

Cost of deb is the effective rate on debts of company

Cost of equity is risk free rate of return on equity of company

All of three cost refer for rate of return on investment

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