Scope City, Incorporated (A)
Questions that I am responsible for is:
4. What is SCI’s historical (book) cost of long-term debt?
5. How do the firm’s current liabilities influence the cost of capital calculation?
6. Using your answers for 3, 4 and 5 above, determine SCI’s historical weighted-average cost of capital (WACC).
7. How should the presentation for the investors’ conference discuss the firm’s growth and historical cost of capital? How are historical costs relevant when discussing future investment?
8. What other information should Ruby Damodaran have on hand for her presentation to the conference? Additionally, what types of questions will investors will likely ask of SCI? How will new types of investors (institutions, for example) likely impact SCI’s choices of capital and strategy in the future?