Weighted Avarage Cost of Capital Research Paper Example | Topics and Well Written Essays - 500 words

Weighted Avarage Cost of Capital - Research Paper Example In other words, WACC also indicates about the minimum required return on the total project outlay. The cost of equity is directly proportional to its return. That means higher the return on equity; the greater will be the cost of equity. In other words, higher return will increase the weighted average cost of capital. The calculation of WACC often helps to determine the economic feasibility while undertaking any mergers of the two different entities or expanding existing business activities. WACC is the actual cost that takes into account both equity and debt based on their actual proportion involved and that is why it is the most appropriate rate while doing capital budgeting exercise. When an organization raises any long-term capital, the WACC cost will get altered as per the new proportion of equity and debt. Initial public offering is made to raise the capital (equity) required for the project. When the promoter of the project is unable to finance the project fully through their own resources, they go to public and issue part equity and thereby raise the capital required for the project. Thus, depending upon the confidence levels shown by the public in the promoter and their project, the required amount in the form of the equity can be raised. This additional capital raised from the public completes the minimum requirement of the equity as proposed by the institutions. Usually, the financial institutions appraise the project and provide the necessary debt necessary to meet the entire financial needs of the project. Each time, when funds are needed for expansionary purposes, the financial needs are met through equity and debt components derived in an appropriate proportion. Mergers and acquisitions are done to take advantage of synergy in the operations. In mergers, two organizations merge and form a single organization. Shareholders of the

Analysis of a Marketing News Story Essay Example | Topics and Well Written Essays - 1000 words

Analysis of a Marketing News Story - Essay Example Although this particular news report talks about the business tactic of Google, it also brings up new idea with regards to the future developments in online marketing options. Advertisements are referring to a â€Å"paid-message in a form of media† with the purpose of attracting the attention of the target consumers (Faber, Lee and Nan, 2004). Aiming to reach for the target audience, the traditional advertisers utilizes newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs, and audiotapes as a communication channels (Kotler, 2000, p. 15). On the other hand, the use of on-line advertisements such as the use on-line banners (usually appears at the top end of a web page), e-mail, search engine advertisements such as Google.com or Yahoo.com, the interactive on-page media ads, streaming audio and video among others has been widely used to catch the attention of online viewers. In fact, the use of online advertisement tools is considered as on o f the fastest growing medium for modern advertisements (Faber, 2002). According to Kotler (2003, p. 4), the main reason why large-scale companies are advertising their products is to â€Å"inform, persuade, remind, or reinforce† the public consumers’ purchasing behaviour. ... 7, 12). Based on consumers’ response with regards to the use of online and traditional advertisements, Gallagher, Foster, and Parsons (2001) revealed that the use of a traditional print ads and advertiesements in Web format does not necessarily provide any significant difference with regards to the viewers’ ability to recall the advertised message. After exploring the impact of pop-up windows and animation on the memory of 60 online advertisement viewers, Diao and Sundar (2007) revealed that the viewers ability to recall the pop-up advertisements is higher as compared to the use of banner advertisements. Not all advertisements are effective in terms of sending the company’s message accross their target customers. For this reason, a lot of researchers have focused their studies on examining the effectiveness of online advertisements (Callaway, 2010; Chtourou and Abida, 2010; Shukla, Sharma and Swami, 2010; Diao and Sundar, 2007). After conducting a researh study w ith regards to the effectiveness of online advertisements, Shukla, Sharma and Swami (2010) explained that the ability of the online advertisers to make the online viewers satisfied with what they see and read about the advertised products and services increases the public viewers’ intention to make online purchases. Therefore, online advertising companies are looking for new ways to improve their existing online advertising services through product and technology innovation. Recently, Sparkes (2012) mentioned that roughly 16,000 businesses are already using the social media as part of their marketing campaign. In line with this, Chtourou and Abida (2010) revealed that the continuously increasing number of existing