Discuss the Attractions of a Private Placement for a Company

question 9

Essay

Discuss the attractions of a private placement for a company.

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Component Cost of Debt

The effective rate that a company pays on its current debt, incorporating tax effects.

Preferred Shares

Preferred Shares are a type of stock that grant holders preferential treatment over common stockholders in terms of dividends and assets during liquidation, but usually do not carry voting rights.

Rate of Return

The increase or decrease in the value of an investment, shown as a percentage of the original amount invested, over a given timeframe.