When should goodwill be included in the computation of roic


Problem 1: When should goodwill be included in the computation of ROIC?

Problem 2: What is the basis for using the company's target capital structure versus the current capital structure when estimating WACC?

Problem 3: What are the components of capital? How do they differ from each other in terms of business value and the common shareholder's interest?

Problem 4: Assume we've gone through a substantial period of high interest rates. How does this affect the interpretation of the values on the asset side of the balance sheet?

Problem 5: How would inflation affect the determination of the WACC, assuming significant inflation?

Problem 6: What is the meaning and significance when a firm has to resort to the use of so-called junk debt to raise capital?

Problem 7: What additional risks are involved with the raising of debt capital from foreign investors?

Problem 8: Outline the Capital Asset Pricing Model (CAPM). Explain the significant elements.

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Finance Basics: When should goodwill be included in the computation of roic
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