Type of assignment:
Urgency:
Writer level:


 
Cost per page:
 
Number of pages:
 
Total without discount:
 
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
 
300 Words per page
12 pt Times New Roman Double-spaced typed page
MBA and PhD Writers
Relevant and up-to-date
US Writers
100% Confidentiality Quality Guarantee
24/7 Support
24/7 Live Chat
Direct Contact with an assigned writer
Flexible Discount Program
ANY Difficulty Level!
I am so impressed with research paper that I received and your service. You are simply the best! In future I will order my papers from you. Best Regards.
Jay, Australia
Say thanks to the writer who helped me with my research paper. A very professional work!!!!!! Much appreciated. Thanks.
Paul, USA
I tried other writing services but from now on I am going to use only your service. My college essay was written in accordance to the standards that were stated on your site. This is great to deal with the service which does what they promise.
Michelle, USA
X
-15% first order  Order now