Which
of the following is true? If a business has no debt but an excess of cash,
which market value represents one third
of the market capitalization (e.g. market capitalization = 3 bn, cash = 1 bn
and EV = 2 bn)

Question

Which
of the following is true? If a business has no debt but an excess of cash,
which market value  represents one third
of the market capitalization (e.g. market capitalization = 3 bn, cash = 1 bn
and EV = 2 bn)

Accepted Answer

The business’s WACC = 150% Ke – 50% after tax interest rate on cash deposits

Answer

The business’s WACC = 75% Ke+25% after tax interest rate on cash deposits

Crowdly

Which of the following is true? If a business has no debt but an excess of cash...

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