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Topic: You are the senior Human Resources representative in a large organization with locations throughout the United States. The company has a long history of taking conservative views or positions on social issues. However, as economic compression strengthens, the senior leadership in the company recognizes that the conservative reputation of the organization is limiting entry in to various markets. The decision has been made to make changes throughout the organization’s approach to these issues, starting with its people programs. Specifically, the organization has selected to approve the offering of health benefits to domestic partners. You’ve been tasked with preparing the roll-out of this new initiative to the employees at all locations. Discuss how this will impact the organizations diversity training – what will need to change? Provide specific elements of how you will handle the concerns of current employees, over this new direction the leadership is taking. Finally, how will you personally balance this shift in the organizations’ direction, with your biblical worldview?
Submit your thread by 11:59 p.m. (ET) on Monday of Module/Week 1, and submit your replies by 11:59 p.m. (ET) on Monday of Module/Week 2.

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(a) Explain fully the effect of the use of debt capital on the weighted average cost of capital of a company. (6 marks) (b) Millennium Investments Ltd. wishes to raise funds amounting to Sh.10 million to finance a project in the following manner: Sh.6 million from debt; and Sh.4 million from floating new ordinary shares. The present capital structure of the company is made up as follows: 1. 600,000 fully paid ordinary shares of Sh.10 each 2. Retained earnings of Sh.4 million 3. 200,000, 10% preference shares of Sh.20 each. 4. 40,000 6% long term debentures of Sh.150 each. The current market value of the company’s ordinary shares is Sh.60 per share. The expected ordinary share dividends in a year’s time is Sh.2.40 per share. The average growth rate in both dividends and earnings has been 10% over the past ten years and this growth rate is expected to be maintained in the foreseeable future. The company’s long term debentures currently change hands for Sh.100 each. The debentures will mature in 100 years. The preference shares were issued four years ago and still change hands at face value. Required: (i) Compute the component cost of: – Ordinary share capital; (2 marks) – Debt capital (2 marks) – Preference share capital. (2 marks) (ii) Compute the company’s current weighted average cost of capital. (5 marks) (iii) Compute the company’s marginal cost of capital if it raised the additional Sh.10 million as envisaged.

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