Weighted Average Cost Of Capital Wacc Commodity Historic Prices Index Prices And Country Risk



Weighted Average Cost Of Capital (WACC),​ Commodity Historic Prices,​ Index Prices,​ And Country Risk
The Weighted Average Cost of​ Capital (WACC) is​ a​ calculation of​ a​ company’s proportionately weighted capital according to​ specific categories .​
All sources of​ capital – common stock,​ preferred stock,​ bonds,​ and any other debt are included .​
It’s computed by multiplying the​ cost of​ each capital source by its proportional weight (% of​ total capital) and then working through this equation.
WACC = (E/V) * Re + (D/V) * Rd * (1-Tc)
Where:
Re = cost of​ equity
Rd = cost of​ debt
E = market value of​ the​ firm’s equity
D = market value of​ the​ firm’s debt
V = E + D
E/V = percentage of​ financing that is​ equity
D/V = percentage of​ financing that is​ debt
Tc = corporate tax rate
The WACC is​ useful in​ determining how a​ company gains its capital .​
is​ it​ financing itself through debt or​ equity? the​ WACC helps answer that question .​
Computing WACC offers insight into a​ company’s ability to​ make returns upon its investments and,​ hence,​ money for investors .​
The WACC is​ often used by internal management to​ steer the​ company toward beneficial,​ moneymaking projects and away from losing ones.
A historical commodity price index will illustrate prices of​ a​ commodity at​ specific historical times .​
Over a​ given period of​ time the​ average of​ these indexed prices gives the​ commodity’s historical price .​
Speculation on​ future commodity prices can be made on​ fluctuation’s of​ the​ commodity’s historical price .​
The spot commodity price is​ the​ price of​ a​ commodity on​ the​ spot where it​ is​ being sold on​ the​ cash market.
Index closing prices are the​ numbers we​ hear given on​ nightly news broadcasts .​
The NYSE index and NASDAQ index are both examples of​ whole market stock indices .​
The Dow Jones Industrial Average and the​ S&P 500 are examples of​ broad-base stock indices .​
The prices of​ these broad indices are determined by using the​ closing prices issued by the​ primary exchange for each member stock in​ the​ index .​
If the​ price changed during the​ trading day,​ the​ new price is​ used to​ calculate the​ index closing price .​
Thus,​ with the​ S&P 500 calculations of​ price fluctuations for all 500 member stocks each day are made to​ determine the​ daily index price.
Country risk rates reflect the​ risk of​ investment in​ that country .​
Government stability,​ both political and financial,​ factor into this heavily .​
Banks may use this term to​ determine whether or​ not it​ wants to​ provide financing to​ a​ company that does a​ lot of​ business overseas .​
The magazine Euromoney puts out a​ survey of​ country risk and ranks them.





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