I need a reply to the attached word in about 200 words

I have attached an essay written by one of my classmates. I need a reply in about 200 words. Referneces are important
abraham_karikuzhiyil.docx

Unformatted Attachment Preview

Don't use plagiarized sources. Get Your Custom Essay on
I need a reply to the attached word in about 200 words
Just from $13/Page
Order Essay

Abraham Karikuzhiyil – Monday, 14 May 2018, 1:21 PM
The Cost of Capital Dilemma in an Organization
Harriet’s decision is certainly not correct because even the retained earnings of the organization
have a cost. Retained gains in these cases are the amount of money proportioned to the total net
profits, which is distributed among shareholders; however, they are further flowed back to the
business. Razmerita, Kirchner, & Nielsen, (2016) argues that, despite the fact that these kinds of
money do not have a direct outflow of cost in the equality case and cash outflow, plus debts, they
lack the opportunity cost. The retained earnings do not cost free source of funding, and the actual
cost of the retained earnings is more or less equal to the rate of return to the owners or instead
shareholders and the reinvestment of dividends paid by the organization or company. This,
therefore, mean that retained earnings to some extent have the same cost, like that of the common
equity, which in this case study is 15%. It, therefore, brings no difference to the organization even if
they use the retained earnings instead of the thirteen percent-weighted average cost of capital. As
the vice president, it has no need considering her suggestion since it has no change or benefit to the
company.
No, this is not a good idea.
This is because, as I started in the above paragraph, the total cost of retained earnings to some
extent equal to the value of the return to the owners. In the subsequent case, the total cost of the
common equity is just a mere 15%. This portrays that the sole decision would make the weighted
average cost of capital of her thought eleven percent, which is alternatively more than the expected
return of ten percent from the expansion. It is true, and my answer is yes as the various capital
projects are required to have their own cost of capital rates for budgeting. This is however contrary
to the application of weighted average cost of capital or rather the equity capital cost calculated by
CAPM since different projects can have varying risk levels. It is, therefore, a typical idea when every
project’s cost capital is required to reflect on the risk of the expansion project and not the associating
to the firm’s average project reflected in the composite weighted average cost of capital. Despite the
fact that WACC is a method of valuing many of the projects, however, it is in most cases dependent
on the risk factor associated with it. This, therefore, portrays that if a project has either high or low
risk, then WACC will have to adjust upwards or sometimes downs to account for the differential
risks. For access to all the playing field, the premium of risk has to be considered individually due to
the different risks involved in the whole project. Concerning this particular project, a regular basis
accounting for all the specific risk factors by, which a correct estimate of the cost of capital can be
made accessible to the viability of the project. Management must always check out very keenly
when dealing with issues to do with management. The decisions they make must depend on the
consent of all the board members and if there is no board, then better a channel of decision must be
established to ensure all decisions are keen and of benefit (Rey, 2015)

Purchase answer to see full
attachment

GradeAcers
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Order your essay today and save 15% with the discount code DISCOUNT15