Lester ElectronicsFinancing Alternative BenchmarkMBA 540 ? Maximizing Shareholder WealthLester Electronics Financing Alternative BenchmarkIntroductionIt has arrive a popular trend in corporate the States to start, merge and/or acquire companies. This trend has become so popular due to the different models of handicraft formations to choose from and the many another(prenominal) choices companies or individuals have to pay the activities of the guild. Businesses can choose to finance activities of the fellowship by issuing debt and equity. This determines the capital structure of the company, which is rattling important once the business begins to run. Cash flow is overly another important aspect of the business because it aids business managers in making decisions for the company. These are some of the important concepts related to the Lester Electronics scenario. Lester Electronics would like to acquire a Shang-Wa Electronics (Shang-Wa) because it would be beneficial to the company and the business they are originally doing with Shang-Wa brings in a commodity amount of revenue but Lester Electronics must evaluate its current situation and decide what is best for its company. As in more or less situations, there are issues and opportunities that Lester Electronics will have to review in order to determine if the acquisition would be a near choice for the company.
The shareholder?s interest and the company?s goals are also priority when making major decisions that may affect the company financially. A goal of every company is to maximize shareholder?s wealth as rise as the company?s revenues.
Determine the Weighted sightly Cost of CapitalThe weighted-average cost of capital (WACC) is a formula that helps a company to find out how much the company is expense on interest on all its financing activities such as stockholder?s equity both rough-cut and preferred, as well as bonds. Each financing operation whether from debt or equity has a cost.
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