Acquiring company is JCPenney Target company is Kohls

A company's assets are financed by either debt or equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By takinga weighted average, we can see how much interest the company has to pay for every dollar it finances.

A firm's WACC is the overall required return on the firm as a whole and, as such, it is often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers. It is the appropriate discount rate to use for cash flows with risk that is similar to that of the overall firm.

* Discuss Debt and Equity

* Return

* The cost of capital

* Opportunity Cost

The Formula for WACC = rD(1-Tc)*(D/V)+rE*(E/V)

rD= the required return of the company's debt financing, calculated as the firms total interest payments divided by the firms average debt over the past year.

Tc= Firms Tax rate

D/V = Debt/Total Value

rE= Cost of Equity

E/V= Equity to total Value

For Acquiring Company WACC = ?% (SOLVE)

Determination on how the Acquiring Company will pay for the Target Acquisition Company (Paul)

* Evaluate the advantages of equity financing

*Evaluate the disadvantages of equity financing

*Evaluate the advantages of debt financing

*Evaluate the disadvantages of debt financing

CONCLUSION:

- Determine how the parent company will pay for the target acquisition company

- Develop a strategic growth plan

- Explain how this acquisition supports the plan