Competency 2: Evaluate the financial health of the firm.

  • Competency 2: Evaluate the financial health of the firm.

Introduction

By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:

  • Competency 2: Evaluate the financial health of the firm.
    • Formulate the break-even analysis.
    • Calculate cost of trade credit and bank loan.
  • Competency 4: Evaluate optimal capital structure.
    • Calculate the optimal capital structure.
    • Calculate the WACC and optimal capital structure.

Instructions

For this assessment, complete Problems 1–4 evaluating optimal capital structure and the financial health of a firm. You may solve the problems algebraically, or you may use a financial calculator or an Excel spreadsheet. In addition to your solution to each computational problem, you must show the supporting work leading to your solution to receive credit for your answer. Note the following:

  • You may need an HP 10B II business calculator.
  • You may use Word or Excel, but you will find Excel to be most helpful for creating spreadsheets.
  • If you choose to solve the problems algebraically, be sure to show your computations.
  • If you use a financial calculator, show your input values.
  • If you use an Excel spreadsheet, show your input values and formulas
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