CAPDM Tutorial Applets

Weighted Average Cost of Capital

Functionality:

This applet shows how company value and return on assets depend on the level of gearing.

At a common sense level it seems obvious that it does not matter whether a company is financed by borrowing or by equity. However, this is wrong. There are two main reasons for this. First, borrowing takes precedence over equity, therefore to the extent that a company finances itself by borrowing, the equity becomes more risky. Second, the interest paid on borrowing is free of corporation tax, therefore the extent to which the company is geared affects the after tax cash flow.

Remote Control using JavaScript

Version information for this applet can be displayed. The applet can also be reset to its initial setings.

Examples

Set Corporation Tax Rate to 35%

Set Unleveraged Rate to 25%

Set Risk Free Rate to 5%

Set Net Op Cash Flow to 7500

Reset Applet

Show 'About' dialog

Show applet status

How to Invoke the Applet

The applet can be invoked by embedding an APPLET tag into your HTML document (if you look at the source of this document you will see a working example you can copy). The table below details the basic parameters used and additional startup parameters that are specific to this applet.

<APPLET
  CODEBASE="../../../../classes"
  ALT="Weighted Average Cost of Capital"
  CODE="applet.capdm.finance.wacc.WACCApp"
  NAME="WACC"
  WIDTH="400"
  HEIGHT="500">
</APPLET>

Basic Parameters	Use
CODEBASE="../../../../classes"	The CODEBASE of the applet must point at the top-level classes directory in order for the applet to be found.
CODE="applet.capdm.finance. wacc.WACCApp "	This required attribute gives the name of the file that contains the applet's compiled Applet subclass. This file is relative to the base URI of the applet.
ALT="Weighted Average Cost of Capital"	This optional attribute specifies any text that should be displayed if the browser understands the APPLET tag but can't run Java applets.
NAME="WACC"	This optional attribute specifies a name for the applet instance, which makes it possible for applets on the same page to find (and communicate with) each other. If you intend to use JavaScript/Applet scripting then the applet must be named as shown.
WIDTH="400" HEIGHT="500"	These required attributes give the initial width and height (in pixels) of the applet display area, not counting any windows or dialogs that the applet brings up.
Applet Startup Parameters	Use

For more information on the use of the APPLET tag and other attributes you can use but which are not listed above, visit the W3.org specification page at: APPLET tag in HTML 4.

Runtime Applet API Calls

This applet can be called into using Javascript 1.1 while running. Although JavaScript can call the Applet directly, some convenient JavaScript functions have been created which deal with the details of the communication. The following table lists the call Names which can be made, and gives examples of their use and results.

API Call Name	Parameters	Use and Result
showAbout()	none	`javascript:showAbout();` Shows the version dialog box of this applet.
reset()	none	`javascript:reset();` resets the applet to initial starting position