How do you determine the appropriate cost of debt for a company? Does it make a difference if the company's debt is privately placed as opposed to being publicly traded? How would you estimate the...

Discussion. ( No word limit for this discussion}
a. How do you determine the appropriate cost of debt for a company? Does it make a
difference if the company's debt is privately placed as opposed to being publicly
traded? How would you estimate the cost of debt for a firm whose only issues are
privately held by institutional investors?
Answer: The appropriate after tax cost of debt to the company is the interest rate it would have
to pay if it were to issue new debt today. Hence, if the YTM on outstanding bonds of the
company is observed, the company has an accurate estimate of its cost of debt. If the debt is
privately-placed, the firm could still estimate its cost of debt by (1) looking at the cost of debt for
similar firms in similar risk classes, (2) looking at the average debt cost for firms with the same
credit rating (assuming the firm’s private debt is rated), or (3) consulting analysts and investment
ankers. Even if the debt is publicly traded, an additional complication occurs when the firm has
more than one issue outstanding; these issues rarely have the same yield because no two issues
are ever completely homogeneous.
. Is there an easily identifiable debt-equity ratio that will maximize the value of the
firm? Why or why not?
Answer: No there is no such identifiable debt-equity ratio , that will maximize the value of the
firm. The debt and equity ratio does differ from firm to firm as per the capital structure.Every
firm should go for debt – equity as per the requirement and as per the optimal capital structure. If
there is more debt capital inducted to the capital structure of the firm , then the firm has to serve
the debt and there will be more outflow of funds.
c. Describe business owner’s / executive’s obligation to do more for the environment than
the law requires.
Answer: As per the law there may be marginal requirements which need to be followed by
usiness. There are some more obligations which the executives / business owners perform in a
form of corporate social responsibility.Adoption of good corporate social responsibility has
ecome the epicenter for successful business houses.
d. Summarize the value of knowing about environmental law (at least some aspects of it),
even if you are not working for a company directly, impacted by any of the four
environmental laws identified in the chapter.
Answer:Once we understand the value of environmental law, it really helps to do an ethical
usiness. Because there are certain environmental environmental laws which does permit you to
manufacture certain products as it will have a negative impact on the society. Hence knowing
environment laws helps to take important business decisions.
e. Discuss possible ways that a company could benefit from making customers more
aware of environmental laws. Provide specific examples to support your rationale.
Answer: Once the company is able to make aware of environmental laws to its business, it helps
the customers to understand the environment better and the company can improve its business
and can add more customers to its portfolio along with retaining the existing customers.
Generally the products dealt in by FMCG companies has this kind of advantage and they are able
to increase their business size. It happened in case of P&G to improve its business size by
sending environmental aware messages to the society.
f. Based on what you discovered in the e-Activity, develop a strategy that any manager
could use to boost sales from customers using this website. Give an example of one
highly rated companies and one low-rated company.
Answer: The manager of a highly rated company can give more awareness program
egarding the environment in the website and there can inform which the products dealt by
his company are environmentally friendly to use. As his company is dealing with products
which are environmental friendly , the company was rated highly by the rating agency. This
message will turn the customer to go purchasing products for the company.
The sale of the low rated company may give different element details on the website and can
inform that his company has recently introduced many good products which are user friendly
in terms of environment protection. The sales manager can bundle certain products and start
pushing them in order to generate more revenue. Initially it will take time but, going
forwards it will get the momentum of generating more revenue.
Part b
Question 1
Assignment 2: Legal Advice

Select a company with whose headquarters are located in the state in which you live. Use the
Internet to research the company and any major initiatives they have planned during the next 5
years (do NOT select a company that is not planning at least 1 major initiative).
Write a 4 page paper in which you:
1. Describe the company and the major initiative(s) they have planned for the next 5 years.
2. Determine which elements of administrative law will be most relevant to the upcoming
initiative(s) and what...