Capital Structure Weights and Cost of Equity Capital

Running Head: ACCOUNTING FOR MANAGERS
ACCOUNTING FOR MANAGERS

Running Head: ACCOUNTING FOR MANAGERS
Table of Contents
Introduction.................................................................................................................... 3
A. NOPAT and EAT................................................................................................... 3
B. Capital structure weights.......................................................................................... 4
C. Cost of Equity Capital............................................................................................. 4
D. Cost of Equity Capital............................................................................................. 5
E. DOLLOR COST OF CAPITAL.................................................................................6
F. ECONOMIC VALUE ADDED.................................................................................. 6
G. Percentage of Ownership............................................................................................ 6
References..................................................................................................................... 8

Running Head: ACCOUNTING FOR MANAGERS
Introduction
Venture capital also termed as VC is a kind of the private equity, a technique used in finance to
assist by firms or funds to small, early-stage, emerging firms that seems to be profitable as well
as potential, or which have reflected the elements of the growth in them. In this report Alam.com
Venture is an e-commerce service which is involved in the video games, television programs and
it claims to be both enjoyable and educational bounded. A detailed understanding of the financial
aspects is considered to have a look on whether there has been any valued addition or not (Grant,
2016).
A. NOPAT and EAT
ALMA.COM VENTURE
Particulars Amount ($)
Sales $ 36,500,000.00
Net profit margin $ 6,570,000.00
Tax Rate (40%) $ 2,628,000.00
NOPAT $ 3,942,000.00
The net operating profit of the company is $3942000. Generally the net operating profit is
nothing but the EBIT with the tax deduction where the interest costs are not considered in order
to find out the raw profit generated by the enterprise (Reid and Myddelton, 2017).
Particulars Amount ($)
Sales $ 36,500,000.00
Net profit margin $ 6,570,000.00
Expenses
Interest on lease $ 640,000.00
Interest on bank $ 300,000.00
Interest on long term debt $ 60,000.00
Total interest expense $ 1,000,000.00