Custom The Cost of Capital for Goff Computer Inc essay paper writing service

← Global ConditionsThe Gaming Industry →

Buy The Cost of Capital for Goff Computer Inc essay paper online

In order to assess the Dell Inc.’s NPV as well as the  capital rationing, it is important to ascertain the  most appropriate cost of capital that can be used. The company is ought to derive its corporate cost of capital sinvce Dell Inc. Company’s affiliates  are more or less the same  in both it services and operation provisions (“Dell Inc. a”, 2012). As a result of this , the Dell Inc. can use capital asset pricing model, making the assumption that this  market is within ASX/S&P500 index  representation. Therefore, the Dell Inc. can utilize monthly returns for ten years, which is assumed to be starting from year 2001 to 2011, as represented by the following table.

The Dell Inc. Company’s beta is represented below. This Dell Inc. can as well utilize the  classical CAPM method so as to ascertain its cost of capital, and the data from the table has revealed the Dell Inc.’s risk premium to be 32.0%, 2.7% risk free rate,  and 3.16% cost of equity (“Finra”, 2012).  Moreover, Dell Inc. Company's can use the tax adjusted CAPM, in calculating its equity cost. Making use of tax adjusted CAPM calculation method, the Dell Inc. can find the tax adjusted SML slope to be  33.13%, which translates to  11.63% cost of equity, contrary to the 5.6% cost of equity, from the previous calculation (“Dell Inc. b”, 2012).

Deriving Dell Inc.’s WACC

The following calculation presents the Dell Inc. Company’s weighted average cost of capital. Moreover, it is essential to put into account that  Dell Inc.’s credit rating may change, a situation that can affect the Dell Inc.’s ability to raise capital and other funding requirements.It can as well be noted that downgrading the  credit rating of this Dell Inc. can significantly affect its ability to access big lending facilities (“Unstructured Finance”, 2012).

Summing up, the book value weights give different results from the market value weights for WACC calculation, as shown above. The market value weights are more relevant because they represent the fair values, as opposed to book value weights that are mere estimates. Therefore, this approach suffers the limitation of inaccuracy, that is, failure to give the real position of the company’s cost of capital, and this can be avoided by adopting the data on the market value weights.

Buy The Cost of Capital for Goff Computer Inc essay paper online

Related essays

  1. The Gaming Industry
  2. Economic Statistics Report
  3. Global Conditions
  4. Economic Statistics Analysis
 
order now
Live chat!
Planets Live support online chat Live support phone
Our Advantages
300 Words per page
Bottom line
12 pt Times New Roman Double-spaced typed page
Bottom line
MBA and PhD Writers
Bottom line
Relevant and up-to-date
Bottom line
US Writers
Bottom line
100% Quality Guarantee
Bottom line
24/7 Support
Bottom line
24/7 Live Chat
Bottom line
Flexible Discount Program
Bottom line
ANY Difficulty Level!
Testimonials

I cannot thank you enough, EssaysProfessors.com, for helping me as much as you have over the last four years. I have just come from defending the dissertation that you wrote for me. The committee was blown away by its quality and so was I. Your writers obviously made every effort to do an excellent job, and that is exactly the result they got.


Quincy J., Washington, D.C, USA

My own classmates are surprised that a writing company can actually deliver such a proficient thesis given the time limit that I gave you people. More than half the class has vowed to come running next semester owing to the workload that we anticipate. I don't regret one dollar I spent on this paper. Keep up the good work.


Johansen S., Berlin, Germany

The work that writer #8756 put into writing my research proposal was phenomenal! I am very happy with it and would hire this person to do writing assignments for me any time! EssaysProfessors.com is a remarkable writing service. I am so happy I listened to the advice of my classmate who recommended you.


John M., Broken Hill, AUS

X
-15% first order  Order now