capital [WACC]. The estimation of Boeing’s WACC must be consistent with the overall valuation approach and the definition of cash flows to be discounted. Note that this process is a forward looking focus and is laden with uncertainty. It is how the assumptions are modeled that many costly mistakes can be made. While finding a rate of return for an individual project‚ it is important to remember that WACC is only appropriate for an individual project. The many factors affecting WACC are:
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for capital budgeting rather than Return on Investment (ROI) method and Payback Period method. Secondly‚ I calculate the Weighted Average Cost of Capital (WACC) which will be used as discount rate while calculating NPV. Then‚ I decide which rapid prototyping system company should invest as well as I compare the each expansion projects’ IRR with WACC to decide which projects should be invested and which should not. After deciding projects which should be accepted‚ I draw Investment Opportunity Schedule
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growth rate to determine the terminal value in the DCF valuation. To derive the DCF‚ it is critical for this analysis to obtain the discount rate. Thus‚ it estimated the Weight Average Cost of Capital (WACC) as the discount rate. To estimate the WACC‚ the following inputs are estimated to generate the WACC of each country: cost of debt and the dost of equity‚ and the debt to value ratio and equity to value ratio. After the analysis obtained the discount rate of each country‚ the DCF values of the three
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Valley which could prove that the Biblical story about Naboth’s vineyard is true. She used laser technology to find the biggest ancient winepress to date found in Israel and more than 100 bottle-shaped pits embedded into the bedrock which were probably used for wine storage‚ Breaking Israel News reports. Dr. Franklin’s findings led her to believe that the story about King Ahab’s conflict with Naboth over the latter’s coveted vineyard could have happened in the Jezreel Valley. However‚ some Bible scholars
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61 Questions for Extra Credit Points. Due 12/16 (Wednesday) (Please show your work and provide your explanation) You need to show your work and explanations. Jotting down only the answers is not acceptable. If you do all 100 questions‚ you will get up to 3 extra points added to your final total score (after I determine your total score based on mid-terms‚ HWs‚ and the final). Chapter 5 1. You plan to analyze the value of a potential investment by calculating the sum of the present values
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exaggeration. Combining these two forms of writing or literature increases the interest of the story as well as the humor. Mr.Twain switches the two every so often‚ which never leaves the reader bored or uninterested.Within the story of The Jumping Frog of Calaveras County‚ it is literally a story about nothing‚ but the reader does not realize‚ because of the regional dialects of the different places which adds to the humorous portion of the text due to the way the characters speak. We see examples of this once
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specific items of capital should be included in the SIVMED’s WACC? Should before-tax or after-tax values be included? Should historical or new values be used? Why? Answer: WACC covers computation of SIVMED’s cost of capital in which each category of capital is proportionately weighted. All capital basis - common stock‚ preferred stock‚ bonds or any other long-term borrowings – should be listed under SIVMED’s WACC. We determine WACC by multiplying the cost of the corresponding capital component
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the use of debt in the capital structure‚ and repurchase undervalued shares 2) Marriott uses WACC to measure the opportunity costs of capital of investments with similar risks. Each division of Marriott has a different cost of capital‚ based on debt capacity‚ debt cost‚ and equity cost. They use the estimate of cost of capital to determine the fraction of debt that should be floating rate debt. WACC is also used to determine the premium above government bond rates for their unsecured debt. This
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(13-10) Corporate Valuation The financial statements of Lioi Steel Fabricators are shown below—both the actual results for 2010 and the projections for 2011. Free cash flow is expected to grow at a 6% rate after 2011. The weighted average cost of capital is 11% Income Statements for the Year Ending December 31 (Millions of Dollars Except for Per Share Data) Actual 2010 Projected 2011 500.00 $ 530.00 360.00 381.60 37.50 39.80 397.50 $ 421.40 102.50 $ 108.60 13.90 16.00 88.60 $ 92.60 $35.44 53.16
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to Star. Thus‚ the project(s) that will add the most value to Star Appliance will be worth pursuing. The current hurdle rate of 10% should be re-evaluated by finding the weighted average cost of capital (WACC). Then by forecasting the cash flows of each project and discounting them by the WACC to find the net present value‚ or by solving for the internal rate of return‚ we should be able to see which projects Star should undertake. Conclusion: Which Projects? After calculating the Net Present
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