Corporations often use different costs of capital for different operating divisions.

Cost of Capital 
Corporations often use different costs of capital for different operating divisions. Using an example, calculate the weighted cost of capital (WACC). What are some potential issues in using varying techniques for cost of capital for different divisions? If the overall company weighted average cost of capital (WACC) were used as the hurdle rate for all divisions, would more conservative or riskier divisions get a greater share of capital? Explain your reasoning. What are two techniques that you could use to develop a rough estimate for each division’s cost of capital? Your initial response should be 200 to 250 words.

 

Need Other Tutorials For BUS 401? You may click on the links below to go to respective tutorial.

·         BUS 401 Week 1 Assignment ( Financial Management Challenges and Ethics ) ·         BUS 401 Week 1 Discussion 1 ( The Role of Financial Management in a Firm ) ·         BUS 401 Week 1 Discussion 2 ( Financial Statements ) ·         BUS 401 Week 1 Quiz ·         BUS 401 Week 2 Assignment ( Teaching Net Present Value (NPV) and Future Value (FV) ) ·         BUS 401 Week 2 Discussion 1 ( Dreams Do Come True ) ·         BUS 401 Week 2 Discussion 2 ( Investing in Bonds ) ·         BUS 401 Week 2 Journal ( Present and Future Values, and Expected Returns ) ·         BUS 401 Week 2 Quiz ·         BUS 401 Week 3 Assignment ( Return on Investment Education Funding ) ·         BUS 401 Week 3 Discussion 1 ( Cash Flows From Working ) ·         BUS 401 Week 3 Discussion 2 ( Capital Budgeting ) ·         BUS 401 Week 3 Quiz ·         BUS 401 Week 4 Assignment ( Identifying and Managing Risk ) ·         BUS 401 Week 4 Discussion 1 ( Interviewing Peter Lynch ) ·         BUS 401 Week 4 Discussion 2 ( Cost of Capital ) ·         BUS 401 Week 4 Journal ( Risk and Return ) ·         BUS 401 Week 4 Quiz ·         BUS 401 Week 5 Assignment ( Evaluation of Corporate Performance ) ·         BUS 401 Week 5 Discussion 1 ( Ratio Analysis ) ·         BUS 401 Week 5 Discussion 2 ( Applying Ratios to a Business )