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10.50%

4.80%

10.50%

$4,711

10%

11.00%

5.10%

10.41%

$4,807

20%

11.60%

5.40%

10.36%

$4,862

30%

12.30%

5.52%

10.27%

$4,970

7 In other words, the value of the firm might not be maximized at the point that cost of capital is minimized, if firm cash flows are much lower at that level.

40%

13.10%

5.70%

10.14%

$5,121

50%

14.00%

6.30%

10.15%

$5,108

60%

15.00%

7.20%

10.32%

$4,907

70%

16.10%

8.10%

10.50%

$4,711

80%

17.20%

9.00%

10.64%

$4,569

90%

18.40%

10.20%

11.02%

$4,223

100%

19.70%

11.40%

11.40%

$3,926

Note that the value of the firm = Cash flows to firm*(1+g)/ (WACC - g)

= $200 * 1.06 / (WACC - .06) The value of the firm increases (decreases) as the WACC decreases (increases), as illustrated in Figure 8.2.

Retirement Planning For The Golden Years

Retirement Planning For The Golden Years

If mutual funds seem boring to you, there are other higher risk investment opportunities in the form of stocks. I seriously recommend studying the market carefully and completely before making the leap into stock trading but this can be quite the short-term quick profit rush that you are looking for if you am willing to risk your retirement investment for the sake of increasing your net worth. If you do choose to invest in the stock market please take the time to learn the proper procedures, the risks, and the process before diving in. If you have a financial planner and you definitely should then he or she may prove to be an exceptional resource when it comes to the practice of 'playing' the stock market.

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