Finance Assignment Example | Topics and Well Written Essays - 500 words

Finance - Assignment Exampled) A break WACC should be calculated based on the project and the costs of the different components of capital and the percentage of for each one component of capital that is use. Therefore, different weights would be used based on the weights expected to be used for the relevant project Question 2 Component Cost of Preferred stock a) Western throne deduct interest group on its debt while there are no similar deductions for dividends. This is so because interest is allowable as a deduction for tax purposes while dividends on common or favored stocks are not allowable as deductions for tax purposes. b) Given the difference in bond ratings in the midst of the public utility company subsidiaries and the unregulated subsidiary the various units have different costs of preferred stock. The one with the higher(prenominal) bond rating would have the lower cost and the one with the lower bond rating the highest cost. The utility subsidiaries and the unregul ated subsidiaries would have different levels of operating risks c) The value at close should be used or the average of the highest and the lowest bid..