case study will focus on the proposed capital structure decisions of Diageo. 2) Is Diageo’s current capital structure appropriate to its new business? It believes that it has traditionally had a conservative debt policy. If so‚ is that policy still appropriate? Has Diageo’s capital structure been as conservative as it believes? (What interest rate coverage ratio has it been targeting? How does it look relative to its competitors?) Diageo’s capital structure has not been as conservative as it
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Solution 1: (i) P0 = D1 Ke - g CA – IPC TEST CAPITAL STRUCTURE = 3.50 (1.06) 0.15 – 0.06 = `41.22 (ii) Ke = D1 + g P0 0.15 = 3.50 (1 + g) + g 50 7.50 = 3.50 + 3.50g + 50g g= 4 = 7.48% 53.5 Solution 2: (i) Determination of EPS at EBIT level of `22‚00‚000 Financing Plan (a) (b) Equity Shares (`) Debentures (`) Pref. EBIT 22‚00‚000 22‚00‚000 Less: Interest (16‚000) (1‚21‚000) Taxable Income 21‚84‚000 20‚79‚000 Less: Tax @ 30% (6‚55‚200) (6‚23‚700) EAT 15‚28‚800 14‚55‚300 Less: Dividend on Pref
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1. What attitude change strategies is Clorox using to persuade consumers to buy its Green Works products? Clorox is definitely using the change ideal strategy. They are trying to move their brand into a new market of being environmentally friendly. They still have their original line but they are introducing a new‚ more eco friendly option for the consumer that is concerned about the environment and the effect these harsh cleaners have on it and their families. The cleaning industry‚ as most other
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Assignment 2: Business Financing and the Capital Structure Principles of Finance Finance 100 December 12‚ 2013 Business Financing and the Capital Structure Raising Business Capital As a financial advisor to this business there are two options to consider for raising business capital‚ equity financing and debt financing. The details‚ advantages‚ and disadvantages of both options will be provided. Also information about raising capital by selecting an investment banker
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Company Overview – Clorox Company The Clorox Company was founded in 1913 by five California businessmen. For the first forty-five years‚ the company avoided expanding its product line and solely sold their standard Clorox liquid bleach. In the 1950s Clorox‚ still a one-product company‚ possessed the largest portion of the market for consumer bleach. This domination of bleach caused the Procter & Gamble Company to view Clorox as a befitting addition to its existing line of products and attempted to
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top management must decide whether or not to continue investing so heavily in sustainability. This decision applies not only to Clorox‚ but it’s Green Works‚ Burt’s Bees‚ and Brita brands. The Centennial Strategy’s goal is to achieve and sustain double-digit annual growth amongst it’s brands. Delight is designed to keep consumers coming back to Clorox brands. Clorox wants to continue to be innovative in order to win consumer’s loyalty and their repeat purchases. Decide is based on strategies
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Pfizer Inc.’S Cost of Capital and Capital structure - Xiaoyue Shi The costs of capital and capital structures for Pfizer Inc. and its two competitors Merck & Co. Inc. and Johnson & Johnson in the pharmaceutical industry are analyzed in this memo. When calculating the cost of common stock for the three companies‚ three different approaches including Capital Asset Pricing Model (CAPM)‚ Discounted Cash Flow (DCF) and the bond yield plus risk premium are applied (Appendix A). For CAPM approach
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duration and the frequency of the pathways to user conversions. In this paper‚ we propose an alternative data mining framework for analyzing user-level advertising data. In the aggregation step‚ we compress individual user histories into a graph structure‚ called the adgraph‚ representing local correlations between ad events. For the reporting step‚ we introduce several scoring rules‚ called the adfactors (AF)‚ that can capture global role of ads and ad paths in the adgraph‚ in particular‚ the structural
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its first plant site in Oakland‚ paying $3‚000 (The Clorox Co. Website) for it. In 1914‚ the name Clorox was suggested by an engineer for an equipment supplier‚ Abel M. Hamblet. The name was derived from "chlorine" and "sodium hydroxide‚" the two active ingredients in the bleach. Hamblet also drew a rough sketch of a diamond with Clorox written in the center and the
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ch. 16 question 15-1 CHAPTER 15 Capital Structure: Basic Concepts Multiple Choice Questions: I. DEFINITIONS HOMEMADE LEVERAGE a 1. The use of personal borrowing to change the overall amount of financial leverage to which an individual is exposed is called: a. homemade leverage. b. dividend recapture. c. the weighted average cost of capital. d. private debt placement. e. personal offset. Difficulty level: Easy MM PROPOSITION I b 2
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