[pic] [pic] Berkshire Instruments Group No. 1 Alsim‚ Allan Patrick Belgica‚ Robie Escaño‚ Ergo Galang‚ Roberto Villanueva‚ Jill Borlong‚ Li (Michael) SPFINMAN / G05 Prof. Alan Jezrel Solomon‚ MBA 1. Determine the Weighted Average Cost of Capital (WACC) based on using retained earnings in the capital structure. In order to find the WACC‚ we need to find the cost of the components of the capital structure and their proportion in the total capital. Cost of Debt –
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weekly data from 31/08/2005 to 30/08/2010. COST OF CAPITAL Cost of capital of the company has been calculated by using Weighted Average Cost of Capital (WACC) by assigning weights to cost of equity and cost of debt. COST OF EQUITY- CAPM model has been used to calculate the cost of equity (Ke). β (systematic risk) has been calculated using the formula Beta (β) = covariance (market‚ security) Variance (market) Ke=Rf+ β (Rm-Rf) Where‚ Ke=Cost of equity Rf=risk free rate (8.1%) Rm=Market
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ESTIMATING THE COST OF CAPITAL: AN UPDATE 15 “Best Practices” in Estimating the Cost of Capital: An Update W. Todd Brotherson‚ Kenneth M. Eades‚ Robert S. Harris‚ and Robert C. Higgins “Cost of capital is so critical to things we do‚ and CAPM has so many holes in it—and the books don’t tell you which numbers to use… so at the end of the day‚ you wonder a bit if you’ve got a solid number. Am I fooling myself with this Theories on cost of capital have been around for decades. Unfortunately
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FIN 3403 SAMPLE MIDTERM EXAM II 1. A share of common stock has a current price of $82.50 and is expected to grow at a constant rate of 10 percent. If you require a 14 percent rate of return‚ what is the current dividend on this stock? a. $3.00 b. $3.81 c. $4.29 d. $4.75 e. $6.13 ANS: A = $4.40 = D0 (1.10) D0 = $3.00. DIF: Easy OBJ: TYPE: Problem TOP: Constant growth stock 2. The last dividend paid by Klein Company was $1.00. Klein’s growth rate is expected to be a constant 5 percent for 2 years
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CFA Level 2 – LOS Changes 2012 – 2013 Topic Ethics Ethics Ethics LOS 1.1.a describe the six components of the Code of Ethics and the seven Standards of Professional Conduct 1.1.b explain the ethical responsibilities required by the Code and Standards‚ including the multiple sub-sections of each standard. 1.2.a demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by applying
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1) How much importance should be given to the energy cost situation? Michael Burton’s proposal to expand into new energy efficient products is justified by increasing interest in the public and private sectors to reduce energy costs. At the highest level of government‚ the Obama administration has tied the US economy’s energy policy with its future success and competitiveness with other global powers. In a speech on June 2009‚ President Obama specifically mentions the Energy Department’s plans to
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Concepts of business valuation – Critical review of the Discounted Cash Flow (DCF) analysis and its applicability in today’s business world SEMINAR PAPER Table of contents page 1. Introduction...............................................................................................................3 1.1 1.2 2. The importance of business valuation ..................................................................3 Key indicators covered in this seminar paper .............................
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shares of IBM stock for $88 a share. Today‚ you sold your IBM stock for $103 a share. For this problem‚ ignore commissions that would be charged to buy and sell your IBM shares. a. What is the amount of profit you earned on each share of IBM stock? The profit on each share of IBM stock was $15. $103 priced when each share was sold‚ $88 priced when each share was purchased = $15. b. What is the total amount of profit for your IBM investment? The total profit for the IBM transaction
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BAYER AG A Financial Analysis Executive Summary This paper tries to analyse the financial strength of Bayer AG and the other aspects associated with its capital structure and dividend policy. The organisation has been trying to change its financial structure to a management-driven one. This is evident from the reduction in the share capital of the organisation and the rise of debt capital‚ which it has been using efficiently to reduce its tax burden and control the overall
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the finance. Estimated stock price Step 1: To calculate WACC 1) Calculate cost of debt Abstract from Exhibit 16 Treasury and Corporate Interest Rates‚ January 2007-January 2009 Treasury yields Bonds Comm. Paper Date 10 year AAA 8-Jul 4.01 5.67 2.08 Year 2008 percentage cost Commercial paper 500 0.176740898 2.08% Long-term debt 2329 0.823259102 5.67% Total debt 2829 0.152918919 5.04% 2) Calculate cost of equity By using
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