Considering Genesis Energys aggressive growth plan, Sensible Essentials suggested that its client should broaden the scope of financing beyond short-term loans and consider long-term financing options. These options would greatly enhance the ability of the operations management team to fund the capital investments and growth in operating expenses.One option is selling more equity in the company. A public stock offering might be a possibility; however, a company as young and small as Genesis Energy might be hard to value. Sensible Essentials believes that another private investor might require preferred stock dividends in order to mitigate some of the financial risk. Another option is a long-term bank loan.Acting as the finance expert for Sensible Essentials, respond to the following: Determine the cost of debt and equity for Genesis Energy and its weighted average cost of capital. Go to www.yahoofinance.com and look under SEC filings. Use a US publicly traded company, such as Apple, Google, DuPont, etc. On this question you will determine cost only for Genesis Energy, look it up at yahoo finance, do not got to the SEC website, it will only confuse you and do not look up any of the other companies. You simply use your readings about cost of capital, look at formulas and then determine cost of debt and equity for Genesis Energy which you will find at Yahoo Finance. Identify the sources of long-term financing for Genesis Energy. Here you will identify and discuss sources of long-term financing for the same Company. You need to define long term financing and list some of the options you have to accomplish this (debt options and equity options) be detailed in your discussion of this. Analyze the potential costs and benefits of each option. Here based upon the previous question and answer, tell us the potential costs and benefits of both debt financing and equity financing, be detailed and clear in your responses. Explain how relative risk (from the investors perspective) impacts the cost of capital for Genesis Energy. In this question you should position yourself as the investor and discuss how relative risk impacts the cost of capital for Genesis. This is a risk vs reward question and you should talk about this aspect.
Determine the cost of debt and equity for Genesis Energy and its weighted average cost of capital.
August 10th, 2017 admin