This question In Accounting & Financial analysis, I need some experience tutor to review and sum up my answer to this question, in another word toReformulate my answer.

Instruction: (Please, In this paper I have collected more than one solution ( answered) for each question, but I am not that experienced with Analyzing financial Accounting, so I will need a tutor experience to sum up the best answer or re evaluate my answer and connected together re sum it all together and make it concrete analyzed answer for each question). MBA 520 Module Six Forecasting Model Questions The questions that follow and the article Comparing the Accuracy and Explainability of Dividend, Free Cash Flow, and Abnormal Earnings Equity Value Estimates will inform your completion of milestone III. An understanding of the models in this assignment will assist you in hypothesizing the incremental impact of a new investment project for the company. The understanding of these models will contribute to your ability to look toward the future when considering the direction of an organization. Prompt Once you have read the article \"Comparing the Accuracy and Explain ability of Dividend, Free Cash Flow, and Abnormal Earnings Equity Value Estimates\" and Chapters 6 and 7 of your text, review and complete the questions below. Use the article and your text to inform your responses to the questions below. Assignment Questions: 1. For models 2, 2a, and 2b: What is the best way to minimize the weighted average cost of capital? My first Answer: Weighted Average Cost of Capital (WACC) is the combined rate at which a company repays borrowed capital. It comes from debit financing and equity capital. A company can reduce its WACC by cutting debt financing costs, lowering equity costs and capital restructuring. Some of the steps a company can take to lower WACC companies can lower their costs by issuing bonds by lowering the interested rate they offer to investors. The company can also move to a higher tax rate, or they can offer stocks with low beta to be less risky to investors and offer less of a risk premium. Another answer: A best way to minimize the WACC (weighted average cost of capital) WACC is the combined rate at which a company repays borrowed capital. A business mainly raises capital from debt financing and equity capital , and computing WACC involves adding the average cost of debt to the average cost of equity . Reduction of WACC stretches the spread that lies between it and the return on invested capital to maximize shareholders value. A company can reduce its WACC by cutting debt financing cost and lowering equity cost and capital restructuring. Caution must always prevails regardless of method your company employs to reduce WACC. This is because suitability of each of these methods depends entirely on the existing capital structure of the company. For example if your company already has lot of debt it would not wise to take on more debt when seeking to reduce equity cost. Huge amount of long term debts could extremely burdensome to the company. Another Answer: To minimize the weighted average of the cost capital, the company should keep more debt in its capital structure. Because the cost of debt is less than cost of equity, the company will have more debt in its capital the overall weighted average cost of capital shall be lower. Another answer: A Company can reduce WACC by reducing its debt, Equity financing and capital restructuring. That is it should use retained earnings to finance its growth. The company can also utilise the optimal capital structure by using the weights of debt and equity into the capital structure in such a way that it results in a lowest WACC. There is inverse relation between the Market value of the stock and WACC. That is: Higher the WACC lower would be the Market value of the stock; and lower the WACC higher would be the Market value of the stock. My Last answer: Weighted average cost of capital shows a company how expensive it is to finance new projects or other expenditures by raising money from outside sources. These sources come in two main categories: stocks and bonds. Both of these have different costs to the company, and WACC is a weighted average of the total cost of obtaining funds through debt and equity. A company can lower the WACC by lowering the cost of issuing equity, debt, or both. Note: Please, there are 5 different answers for this question, I need your experience to choose the best one or to organize or reassess (or collect them all in one concrete answer) it together or delete or add if need it to sum it up in one concrete answer. What is the effect of the weighted average cost of capital on the market value? My first Answer: Market value weights are more superior to book value weights. They reflect economic values and are not influenced by accounting policies. They are also consistent with the market determined components cots. The difficulty in using the market value is that the market prices fluctuate widely and frequently. A market value based capital means that the amount of debt and equity are continuously adjusted as the value of the firm charges. Another Answer: Effect of WACC on market value Securities analyst employs WACC all the time when valuing and selecting the investment. In discounted cash flow analysis for instance WACC will be used as discount rate applied to future cash flow for deriving the business net present value . It can be used as hurdle rate against which to assess ROIC performance . It also plays key role in economic value added calculations. Investor use WACC tool to decide whether to invest or not. As it represents minimum rate of return at which company produces value for its investors . It serves as useful reality check for the investors. The company WACC is the function of mix between debt and equity and the cost of debt and equity. In the past few years fall g interest rate have reduced company's WACC . Another Answer: A company is typically financed using a combination of debt and equity. Because a company may receive more funding from one source than another, we calculate a weighted average to find out how expensive it is for a company to raise the funds needed to buy buildings, equipment, and inventory. A company looking to lower its WACC may decide to increase its use of cheaper financing sources. For instance, corporation ABC may issue more bonds instead of stock because it can get the financing more cheaply. Because this would increase the proportion of debt to equity, and because the debt is cheaper than the equity, the company's weighted average cost of capital would decrease. My Last Answer: Weighted average cost of capital ( WACC) is used as discounting factor for the calculation of market value, hence the more the WACC , the less shall be the market value. So we can say there is an inverse relation between the WACC and the market value. Note: Please, there are 4 different answers, I need your experience to organized or reassess (or collect them all in one concrete answer) it together or delete or add if need it to sum it up in one concrete answer. 2. For models 3, 3a, and 3b: What is the relationship between book value of equity and time t-1 and the market value of the equity? My first Answer: Book value is the value of an asset according to its balance sheet. For assets, the value is based on the original cost of the asset less any depreciation, amortization, or impairment costs and the value can be higher or lower depending on these accounting practices. Assets such as buildings, land, and equipment are valued based on their acquisition costs, which includes the actual cash price of the asset. The price never changes so long as you own the asset. On the other hand market value is the current price at which you can sell an asset, market value is the price at which an asset would trade in a competitive setting. While book value represents how much the company's assets are worth, market value reveals what investors think the company is worth. Another Answer: Book Value of Equity is the carrying amount which can be seen from the latest financial statement of the entity. This is the amount at which the equity is currently recorded in the books at time t-1, that is, amount that will be recorded one year from now. Market Value of Equity is the amount at which equity is currently available in the market, that is, basically it is the Market Price of Equity as on date. Relationship:If Book Value is more than Market Value, it can be said that the Equity is underpriced and hence should be purchased immediately. If Book Value is less than Market Value, it can be said that the Equity is overpriced and hence should be sold immediately. If Book Value is equal to Market Value, Equity can be purchased/ sold or held by the entity at its choice. Note: Please, choose or connected the best answer: 3. Discuss model 4 and expand on the importance and the meaning of the market risk premium. Answer: Market risk premium is the difference between the expected return on an investment and the risk-free rate of return. Market risk premium is a role of supply and demand, it our demand increases the supply cannot meet the demands and the price will increase. The importance of market risk premiums is that they have clear implications for both investors and security issuers. If a firm wants to raise money, it has to know the market risk premium to determine the cost of capital. Investors drive the market risk premium through their willingness to brave uncertainty and assume risk. Another Answer: Market Risk Premium is the difference of Expected return on a market portfolio and Risk free rate of return. When plotted on a graph, Market risk premium equals the slope of Security Market Line (SML). It has 3 distinct concepts which are: 1. Required market risk premium- The return of a portfolio over risk- free rate required by an investor 2. Historical market risk premium- The historical differential return of market over Treasury bonds, and 3. Expected market risk premium- The expected differential return of market over Treasury bonds. Note: Choose or sum up the best answer between these 2 answers. 4. In your own words, what are the main conclusions for this article, and what could be improved upon in its analysis? Answer: The main conclusion for this article is it compares the reliability of value estimates from the discounted dividend model, discounted free cash flow model, and the dividend abnormal earnings model. According to the article AE value estimates are more accurate and explain more variation in security prices than the other models. The articles states the AE values are better because it has sufficiency of book value of equity as a measure of intrinsic value, and greater precision and predictability of abnormal earnings. Note: For 4. Question (In your own words, what are the main conclusions for this article, and what could be improved upon in its analysis? If you suggest adding or making conclusion for question no 4 please do it