Weatherhead School in Case Western Reserve University All rights reserved. No part of this publication may be reproduced‚ distributed‚ or transmitted in any form or by any means‚ including photocopying‚ recording‚ or other electronic or mechanical methods‚ without the prior written permission of the publisher‚ except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests‚ write to the publisher‚ addressed
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Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 2 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 4 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 5 Appendices 5 i. Objectives This report seeks to answer the following five questions about William Wrigley Jr.: 1. In the abstract
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Pontrelli Recycling the high level cost estimate for the project is $8.8 million. In the following project plan overview‚ the details of the project will be reviewed. Debt and equity financing are two methods that may be employed by a company to obtain necessary capital for projects. Equity financing uses investors to obtain necessary funds. Equity financing does not have to be paid back like a loan and leaves more cash on hand for a company. While this method sounds appealing for those reasons
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alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing’s commercial-aircraft business segment in order to evaluate the IRRs. As a result of that analysis‚ the students identify the key value drivers and distinguish‚ on a qualitative basis‚ the key gambles that Boeing is making. The general objective of this case is to exercise students’ skills in estimating a weighted-average cost of capital and cost of equity. The need for students to estimate a segment
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References: DRAGONWTX. (2012‚ March 19). Nike‚ Inc.: Cost of Capital. Retrieved March 20‚ 2013‚ from Blogger: http://lepicisheng.blogspot.com/2012/03/nike-inc-cost-of-capital.html emfps. (n.d.). Retrieved from emfps.blogspot.com: http://emfps.blogspot.com/2011_06_12_archive.html Jmatsanurai. (2009‚ October 17). Nike Case Study. Retrieved March 20‚ 2013‚ from
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and a coupon rate of 10% per year‚ and managed to raise $40 million for expansion. Currently‚ the AA-rated bonds had 25 years left until maturity and were being quoted at 91.5% of par. Over the past year‚ the Oceanic Corporation utilized a new method for fabricating composite materials that the firm’s engineers had developed. In June of last year‚ management established the Advanced Materials Group (AM Group)‚ which was dedicated to pursuing this technology. The firm recruited Larry Stone‚ a senior
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year ago Dividend per share two years ago Equity beta 5 million $3·30 40·0c 60% 23·3c 22·0c 1·4 Other relevant financial information Average sector price/earnings ratio Risk-free rate of return Return on the market 10 4·6% 10·6% Required: Calculate the value of Danoca Co using the following methods: (i) price/earnings ratio method; (ii) dividend growth model; and discuss the significance‚ to Phobis Co‚ of the values you have calculated‚ in comparison to the current market
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estimate and present each component of the WACC separately‚ explaining briefly but clearly what assumptions you are making for each of them. In the same spirit‚ estimate the appropriate all-equity cost of capital for the APV-based valuation. WACC calculation. WACC = RD*(1-t)*D/(D+E)+RE* E/(D+E) Cost of equity We assume that risk free rate (Rf) equals rate of long-term Treasury Bonds (as the project’s life is 10 years)‚ so Rf = 9.5%. According to Aswath Damodaran equity risk premium in the
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Dourtan assumptions in Exhibit 3.1? 2. What’s is the most relevant valuation model‚ APV or Present Value? 3. How are multi-currency cash flows‚ currency risk and political risk being taken into account in our valuation model? 4. What is the relevant cost of capital for Jersey? For R.T. Nakit? Can they be different? Why? 5. What is the Dinar (Pound) value of the joint venture R.T. Nakit (jersey)? What are the project’s value drivers? 1- The data presented on exhibit 3.7 is‚ indeed following some of
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Project vs Firm Risk and the Impact of Leverage The SML and WACC § Consider 100% equity financed firm § Beta = 1 E/V = 1! D/V = 0! § WACC =? E D WACC = × RE + × RD × (1 − TC ) = RE V V WACC = Cost of equity from CAPM [ ] WACC = RE = R f + β × E [RM ] − R f = E [RM ] Beta =1! 2 SML and WACC SML Expected Return WACC = E[RM] Rf [ R f + β × E [RM ] − R f ] β=1 Beta 3 Accept Projects Y and/or Z? Expected Return IRRz WACC = E[RM]
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