Kim Silverman, CFO of the First Public Bank Company, notes: We are fortunate to have a cost

Question:

Kim Silverman, CFO of the First Public Bank Company, notes: “We are fortunate to have a of only 7 percent. We want to leverage this advantage by acquiring other banks that have a higher cost of funds. I believe that we can add significant value to these banks by using our lower cost financing.” Do you agree with Silverman’s analysis? Why or why not?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...