The BOEING 777 CASE SUMMARY In October 1990 Boeing officially announced the launch of the latest addition to the Boeing family: The Boeing 777. The Boeing 777 is a long range‚ wide-body‚ twin jet engine jet. In this case study we are trying to evaluate the 777 project. This project seems a bit risky since R&D and design expense are very high for this project and the invasion of Kuwait by Iraq has increased the oil prices. 1. We know that there are two ways to increase return on equity RoE
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MARVEL ENTERTAINMENT GROUP Bankruptcy and restructuring Introduction Marvel entertainment group was started by Martin Goodman in 1939. It originally was a comic book business‚ known as Marvel Comics now. We have no way to forget the images of X-men‚ Spider-Man‚ and Thor. Marvel Entertainment Group has had a glorious history‚ and a dominant position in the comic market. However‚ this glorious empire regretfully elapsed in the end. The historical rise and fall influences not only comic fans’
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CASE STUDIES IN FINANCE CASE 3: TELETECH CORPORATION 2005 Q1. Teletech has two divisions- Telecommunications and Products & Services. For the purpose of investment and performance analysis at the firm‚ there is an applied hurdle rate of 9.30% for both divisions. Based on the firms’ WACC‚ this rate represents the cost of capital‚ and essentially‚ the opportunity cost of money. Teletech Corporation uses this hurdle rate to assess the performance of its two divisions; however there is argument
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Marriott Corporation Case Study 1) The Marriott Corporation implemented for key elements into their financial strategy: manage rather than own hotel assets invest in projects that increase shareholder value‚ optimize 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
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rP os t HKU978 NIKHIL CELLY op yo HAIER IN INDIA: BUILDING PRESENCE IN A MASS MARKET BEYOND CHINA In a short 25 years‚ Haier Inc had emerged from being a small refrigerator factory in northeast China to becoming the world’s biggest appliance seller by retail volume. It had exported to developed markets in the 1990s‚ set up factories overseas and created a global retail chain that made it an unmatched success in China. This company that made its name by exporting refrigerators
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are discounting at a higher rate. The case clearly describes that WACC can only measure investment of similar risk class and for that reason we don ’t think the way Marriott uses to estimate cost of capital makes sense since we believe that WACC and net present value of the project must be separately calculated for each part of the company and for each of their projects. 2. What is the weighted average cost of capital for Marriott Corporation? The WACC for Marriot Corp is 9.76%--See calculations
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1.0 Summary of case study NorthPoint Group is a mutual fund management firm which invested mostly in Fortune 500 companies. Its top holding included ExxonMobil‚ General Motors‚ McDonald’s‚ 3M and other large cap. NorthPoint Group performed extremely well although the stock market had declined over 18 months. In 2000‚ it earned a return of 20.7% while the S&P 500 fell 10.1%. At June 2001‚ NorthPoint Group’s return stood at 6.4% while the S&P 500 stood at -7.3%. Nike‚ Inc. is an American multinational
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Debt Equity Debt/Equity Ratio Return on Equity 15‚000‚000 2‚250‚000 0 2‚250‚000 1‚350‚000 1‚000‚000 1.35 0 15‚000‚000 0.00% 9.00% Worst Case 10% 16‚500‚000 2‚475‚000 500‚000 1‚975‚000 1‚185‚000 1‚000‚000 1.185 5‚000‚000 15‚000‚000 33.33% 7.90% Expected Case 30% 19‚500‚000 2‚925‚000 500‚000 2‚425‚000 1‚455‚000 1‚000‚000 1.455 5‚000‚000 15‚000‚000 33.33% 9.70% Best Case 50% 22‚500‚000 3‚375‚000 500‚000 2‚875‚000 1‚725‚000 1‚000‚000 1.725 5‚000‚000 15‚000‚000 33.33% 11.50% 1. For sure‚ the company can
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1) We do not agree with Joanna Cohen’s WACC calculation because she mistakenly used historical data to estimate the future cost of debt. Joanna calculated the cost of debt by taking the interest expense for 2001 and dividing it by the average debt balance. The cost of debt for Nike is the effective rate that it pays on its current debt‚ meaning the yield to maturity of bonds should be used to make an estimate instead of the average debt balance. Through the use of past data‚ the average balance
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March 11‚ 2014 Ladies and Gentlemen of the Board: In my experience‚ I have seen a steady decline in the use of debt financing. Upon closer inspection‚ I have noticed that your company uses no debt at all. As an experienced hedge fund manager‚ I am concerned that your management is missing valuable opportunities by excluding debt from your capital structure. My partner‚ Susan Chandler‚ and I have done extensive research on how undergoing a capital reconstruction process can benefit you in the
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